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A  NATIONAL  MONEY   SYSTEM, 
ADDRESSES 

BY 

R.M..UDNEY 
Los  Angeles  Gal. 
1890-W1894. 


LIBRARY 

OF  THK 

UNIVERSITY  OF  CALIFORNIA. 


•»  run 

UNIVERSITT 


A  T    I   Q-N  A-L-M  0   N  K   Y      SYSTEM 

ADDRESSES 

BY 

R.M .SIDNEY 
Los  Angeles  CaL  , 


PRELIMINARY  ARTICLE 
A  NATIONAL  CURRENCY, 
INCREASED  VOLUME  OF  MONEY. 

Gal, Bankers  Association. 
AS  GOOD  AS  GOLD. 

Commercial  Congress  Kansas  City. 
PROPOSED  NATIONAL  MONEY  SYSTEM. 

Cal. Bankers  Association. 
/OLUME  OF  MONEY,  7/h  AT  IS  MONEY. 

American  Bankers  Association. 
ESSENTIAL  ELEMENTS  OF  MONEY. 

•Vorlds  Congress  of  Bankers  Chicago. 

MISCELLANEOUS. 


July  1890. 
Jctn,  1891. 
Mar,  1891 

Anr,  1891. 

Oct,  1891 
Sep,  1892. 
June  1893. 


r  rorn  the  Los  Angeles  Daily  Times  of  July  7,  1 890. 


THE  CURRENCY 


An  Elaborate   Plan  Originated  by 
Judge    Widney. 


What  He  Says  About  it   Suggested  in  the  Form  of  ua  Bill  to 

Provide  for  a  National  Circulating  Medium,"  and  to 

Regulate  the  Same— Full  Text 

of  the   Measure. 


The  extended  debate  in  Congress  on 
the  silver  question  has  awakened  gen- 
oral  interest  in  the  national  financial 
Astern  throughout  the  country,  ami 
called  forth  an  almost  universal  de- 
mand for  all  information  bearing  upon 
this  important  subject.  TiiETiMKsyes- 
;erday  published  a  letter  from  Senator 
ilenry  M.  Teller  of  Colorado,  explaining 
;it  length  the  provisions  of  the  Silver 
Bill,  the  relations  existing  between  gold 
:md  silver  as  money  metals,  with  a 
;trong  argument  against  the  demoneti- 
sation of  silver.  This  .morning  another 
Branch  of  the  general  subject  is  taken 
up,  to  wit,  paper  currency  as  a  circu- 
lating medium.  Judge  R.  M.  Widney, 
president  of  the  University  Bank,  has 
jciven  a  great  deal  of  attention  to  the 
.study  of  finance,  especially  with 
reference  to  paper  currency  as  a  circu- 
lating medium,  backed  by  the  real 
nstate  of  the  Nation  as  security,  and 
in  which  the  people  are  directly  and 
personally  interested.  Judge  Widney 
lias  formulated  his  views  on  the  sub- 
ject in  the  shape  of  a  "bill  to  provide 


a  national  circulating  medium,  and  to 
provide  for  the  circulation  thereof," 
which  he  thinks  may  yet  become  the 
subject  of  Congressional  legislation. 
The  bill  is  an  exhaustive  document, 
outlining  in  detail  Judge  Widney's 
plan,  and  is  worthy  of  a  careful  perusal. 
In  regard  to  the  measure  the  Judge 
yesterday  made  the  following  state- 
ment to  a  TIMES  reporter: 

JUDGE  WIDNKY'S  STATKMENT. 

Every  civilized  nation  must  have  a  suffi- 
cient volume  of  circulating  medium,  of  one 
kind  or  another,  to  fully  accommodate  tne 
business  of  the  nation. 

The  volume  will  vary  generally  in  pro- 
portion to  the  population  and  the  bulk  and 
activity  of  business,  herein  including  the 
development  of  the  resources  of  the  coun- 
try. 

If  the  circulating  medium  is  kept  in  vol- 
ume to  meet  the  above  demands,  the  busi- 
ness of  the  community  will  be  steady  and 
finances  will  be  trie  from  what  is  known  as 
tightness  of  the  money  market. 

The  people  must,  however,  bear  in  mind 
that  fluctuations  will  occur  by  reason  of  ex- 
cessive production  or  demand  that  no  finan- 
cial scheme  can  obviate. 

It  may  be  safely  asserted  that  gold  and 
silver  cannot  be  controlled  or  obtained  in 


ufficient  quantities  to  fully  meet  the  de- 
mands of  the  commercial  world  for  a  circu- 
lating medium,  and  the  same  is  true  of  each 
nation.  Hence,  each  .  uutiou  is  forced  to 
supplement  the  use  of  gold  and  silver  by 
an  issue  of  currency.  It  may  be  further 
asserted  that  no  nation  has  yet  fully  or  sat- 
isfactorily solved  this  department  of  the 
problem. 

The  proposed  bill  is  limited  to  the  cur- 
rency department  and  does  not  affect  the 
gold  and  silver  questions  before  the  nation. 

Up  to  the  present  all  of  our  legislation  on 
currency  has  been  only  a  makeshift  to  meet 
emergencies  in  a  temporary  manner.  As 
a  nation  we  have  reached  a  point  where  we 
should,  in  harmony  with  the  natural  laws  of 
business,  establish  our  circulating  medium 
on  a  permanent  basis,  so  that  the  whole 
country  may  know  what  to  rely  on  from 
century  to  century  with  only  slight  changes 
for  adjustment. 

Arbitrary  legislation,  in  violation  of  natu- 
ral laws  of  business,  must  sooner  or  later 
break  down.  Therefore  the  only  solution 
of  this  question  is  a  national  system  of 
finances  based  upon  a  natural  law, 
applicable  to  the  case. 

The  present  bill  recognizes  that  th«  na- 
tion alone  should  be  the  bank  of  issue  of  all 
circulating  medium,  gold,  silver  or  paper. 
In  this  way  all  the  property  of  the  people  in 
the  nation  is  the  security  for  the  money  is- 
sued. Every  inhabitant  owning  money  is 
interested  in  the  stability  of  the  money  and 
of  the  Government. 

The  question  of  redemption  is  eliminated 
from  the  problem,  for  to  redeem  implies  a 
uew  reissue  in  some  form  to  keep  up  the 
volume.  There  is,  in  fact,  no  such  thing  as 
bona  fide  redemption,  for  never  is  there  in 
reserve  at  any  one  time  gold  and  silver 
enough  to  redeem  all  outstanding  notes. 
The  only  possible  thing  is  to  provide  fully 
tor  exchange  of  gold  and  silver  tor  cur- 
rency to  meet  special  demands.  This  is  all 
that  has  ever  been  done  even  under  the 
head  of  redemption. 

The  proposed  bill  adopts  the  present  or- 
ganized department  of  Comptroller  and 
clerks,  so  that  no  noticeable  change  will  oc- 
cur in  this  respect,  neither  will  there  be  any 
material  increase  of  employe's. 

A  comparison  of  the  following  sections  in 
parenthesis  will  show  corresponding  sec- 
tions in  the  act  of  June  3,  ^864,  The  first 
number  is  of  this  bill,  the  second  is  of  said 
act: 

(1-1),  (2-2),  (3-3),  (4-22),  (5-24),  (8-5), 
(9-6),  (10-7),  (11-18),  (13-9),  (14-10-11) 
(16-12),  (17-13),  (18-50),  (19-33),  (20-28), 
(21-30-31),  (23-34-45),  (23-35),  (24-38) 
(25-40),  (26-44),  (28-52),  (30-50),  (31-59)! 
(32-60),  (33-61),  (37-27),  (38-53-55),  (39-54) 
(40-63),  (43-64.) 

The   peculiar   provisions   of  this  bill  are 


principally  m  sections  4,  6,  7,  8,  9,  12,  13,  17 
18,  21,  23,  33,  34,  35  and  36.  , 

The  leading  points  on  these  sections  are 
about  as  follows: 

Section  4  provides  for  a  circulating 
medium  in  currency  additional  to  gold  and 
silver  of  $20  per  inhabitant  The  amount 
of  coin  in  circulation  June  30,  1889,  was 
$856,662,356;  in  the  treasury,  $244,050,076. 
Total,  $1,100,712,432.  An  issue  of  $20  per 
capita  in  a  currency,  as  per  this  section, 
would  give  on  the  census  of  1890  $1.280,000,- 
000,  making  a  total  of  coin  and  currency 
circulating  medium  of  $2,380,712,432.  The 
volume  of  coin  and  currency  would  be 
nearly  equal,  and  the  exchange  of  one  for 
the  other  would  usually  balance.  On  a  re* 
demption  plan  the  results  would  be  per- 
fectly safe. 

As  population  increased  between  census 
takings  from  year  to  year  an  additional 
issue  is  provided  for  annually.  Section  4 
also  makes  it  legal  tender  for  all  debts. 
This  prevents  a  corner  on  gold  when  needed 
to  pay  Government  revenues.  Where 
needed  for  foreign  use  it  can  be  had  as 
easily  as  at  present. 

Section  6  provides  for  a  new  issue  every 
twenty  years.  This  is  for  the  purpose  of  re- 
placing in  circulation  notes  to  replace  the 
volume  of  those  lost  and  destroyed;  also  to 
check  incidentally  couaterfeiting,  or  the 
use  of  stolen  plates,  etc. 

Section  7  is  very  important.  This  pro- 
vides for  returning  to  circulation  among  the 
people  the  money  that  is  first  issued*  and  as 
it  returns  in  revenues  and  taxes  to  the  Gov- 
ernment. This  is  done  by  taking  up  all 
outsanding  notes  of  the  Nation;  also  by 
loans  to  States,  cities,  counties,  etc.,  on 
bonds  issued  for  public  improvements.  This 
will  at  one  stroke  reduce  interest  on  all  such 
bonds  to  1  per  cent,  per  year.  This  of  course 
reduces  taxes  in  all  such  cases  for  the 
masses,  and  is  a  sweeping  public  benefac- 
tion to  all. 

Sections  8,  9,  12,  13,  17  and  18  provide  that 
real  estate  may  be  used  as  security,  by 
which  banks  can  obtain  capital  at  a  low  rate 
of  interest  of  1  per  cent,  per  year  on  real 
estate  security,  and  in  return  must  loan  it 
at  not  to  exceed  4  per  cent,  per  year.  The 
Nation  can  never  safely  do  the  detail  bank- 
ing business  of  the  people,  for  the  simple 
reason  that  such  a  business  now  requires 
the  talent  and  time  of  all  the  banks,  bank- 
ers and  employes  now  in  that  business.  To 
succeed  in  this  there  must  be  the  responsi- 
ble, personal  inspection  and  attention  of 
deeply  interested  persons,  persons  who 
realize  that  failure,  a  bad  debt  mean  per- 
sonal financial  ruin  or  loss.  Again  to 
throw  these  out  of  employment  to  put  in 
others  is  no  gain  to  the  people. 

Section  21  provides  that  the  rate  of  in- 
terest shall  not  exceed  4  per  cent.  The 


3 


profits  of  a  bank  are  not  regulated  alone  by 
the  rate  of  interest  it  charges,  but  by 
the  differences  between  the  cost  of  the 
money  to  the  bank  and  the  rate 
charged  by  the  bank.  If  the  Government 
furnish,  capital  to  the  bank  at  1  per  cent, 
and  the  bank  gets  4  per  cent., the  gross  prof- 
it to  the  bank  is  3  per  cent.  In  addition  to 
this  the  bank  receives  the  current  inooniH 
from  the  real  estate  pledged  to  the  Govern- 
ment as  security  for  the  capital  issue.  This 
plan  substitutes,  in  the  present  system,  real- 
estate  tor  United  States  bonds  as  security, 
and  leaves  no  dead  capital  lying  idle  in  the 
United  States  Treasury  as  collateral  secur- 
ity for  bank  notes,  as  at  present.  This  one 
plan  will  of  necessity  cheapen  money  by 
removing  dead  capital,  in  United  States 
bonds,  trom  an  interest  drawing  condition. 

Section  33  introduces  a  matter  of  very 
vital  importance  to  all  the  people.  It  pro- 
vides for  the  publication  of  all  the  valuable 
financial  news  of  the  Nation  in  a  National 
Bulletin  of  Finances.  From  this  quite  an 
accurate  trace  can  be  kept  of  the  journey 
ana  stoppings  of  the  volume  of  money.  A 
careful  consideration  of  its  provisions  will 
fully  show  its  importance. 

Section  84  is  designed  to  correct  existing 
abuses  and  regulate  taxation.  The  rich  be- 
come richer  and  the  poor  poorer  is  a  proverb 
throughout  the  land,  and  the  poor  cry 
aloud  for  work.  Under  this  section,  by 
taxation  and  revenue  the  rich  will  be  con- 
stantly paying  into  the  national  treasury. 
It  is  tht'ii  the  people's  money, 
and  by  ihi>  Government  must  be 
returned  to  circulation.  If  the  Gov- 
ernment will  employ  the  idle  laboring 
classes  on  public  works,  postoffices,  build- 
inirs.  parks,  military  and  naval  matters,  it 
will  furnish  labor  and  bread  to  the  needy. 
The  rate  of  wages  should  be  on  the  basis 
of  employing  or  helping  the  greatest  num- 
ber, and,  generally  speaking,  not  the  best 
laborers.  The  best  laborers  command  good 
wages  from  private  parties,  and  thus  crowd 
out  the  weaker.  At  a  low  rate  of  wages 
these  would  find  employment  and  food  from 
vernment,  and  in  return  woald  give 
us  public  Improvements  at  about  the  same 
cost  as  if  higher  wages  were  paid  to  better 
laborers.  Our  Nation  must  provide  labor, 
food  and  clothing  for  its  poor  labor;  no 
other  one  will  80  provide. 

This  section  prevents  such  Government 
expenditures  being  made  in  a  few  localities, 
thus  drawing  an  over-supply  there.  It  re- 
quires the  expenditures  to  be  made  approx- 
imately to  the  population  in  the  different 
States"  and  communities.  This  is  right,  for 
in  that  proportion  the  people  have  paid  in 
taxes,  and  it  should  be  expended  where  it 
came  from,  as  near  as  may  be. 

Of  course,  the  above  principles  are  appli- 
cable to  many  changes  of  detail,  and 


Congress  would  make  such  changes  as  were 
deemed  best.  _ 

THE    BILL. 


Full  Text  of  Judge   Widney's   Finan- 
cial Scheme. 

A  bill  to  provide  a  national  circulating 
medium,  and  to  provide  for  the  circula- 
tion thereof. 

Be  it  enacted  by  the  Senate  and  House  of 
Representatives  of  the  United  States  of 
America  in  Congress  assembled:  That 
there  shall  be  established  in  the  Treasury 
Department  a  separate  bureau,  which  shall 
be  charged  with  the  execution  of  this  and 
all  other  laws  that  may  be  passed  by  Con- 
gress respecting  the  issue  and  circulation 
of  a  national  circulating  medium.  The 
chief  officer  of  said  bureau  shall  be  denomi- 
nated the  Comptroller  of  Finance,  and  shall 
he  under  the  general  direction  of  the  Secre- 
tary of  the  Treasury,  lie  shall  be  ap- 
pointed by  the  President  of  the  United 
States,  with  the  approval  of  the  Secretary 
of  the  Treasury,  by  and  with  the  consent  of 
Congress,  and  shall  hold  his  office  for  the 
term  of  ten  years,  unless  sooner  removed 
by  tne  President,  with  the  consent  of  Con- 
gress; he  shall  receive  the  annual  salary 
of  $8000;  he  shall  have  a  competent  deputy 
appointed  by  the  Secretary,  whose  salary 
shall  be  $2500  per  year,  who  shall  possess 
the  power  and  perform  the  duties 
of  the  Comptroller  during  a  vacancy 
In  said  office  or  during  the  ab- 
sence or  inability  of  the  Comptroller. 
The  Comptroller  shall  employ  from  time 
to  time  the  necessary  clerks  to  discharge 
such  duties  as  he  shall  direct,  which  clerks 
shall  be  classified  by  the  Comptroller,  sub- 
ject to  the  direction  of  the  Secretary  of  the 
Treasury,  which  clerks  shall  be  classified  in 
the  manner  now  prescribed  by  law.  Within 
fifteen  days  after  his  appointment  he  shall 
take  and  subscribe  the  oath  of  office  pre- 
scribed by  the  Constitution  and  laws  of  the 
United  States,  and  shall  give  to  the  United 
States  a  bond  in  the  penal  sum  of  $100,000, 
with  no  less  than  four  responsible  securi- 
ties, to  be  approved  by  the  Secretary  of  the 
Treasury,  conditioned  for  the  faithful  dis- 
charge of  the  duties  of  his  office.  The 
Deputy  Comptroller  shall  also  take  said 
oath  of  office  and  give  a  similar  bond  in  the 
sum  of  150,000.  The  Comptroller  or  Deputy 
Comptroller  shall  not,  either  directly  or  in- 
directly, be  interested  in  any  association 
doing  a  banking  business  under  this  act. 

Sec.  2.  And  be  itfurtherenactea,  that  the 
romptroller  of  Finance,  with  the  approval 
of  the  Secretary  of  the  Treasury,  shall  de- 
vise a  seal,  with  a  suitable  inscription  for 
his  office,  a  description  of  which,  with 
the  certificate  of  approval  by  the 
Secretary  of  the  Treasury,  shall  be  filed  in 


the  office  of  the  Secretary  of  State  with  an 
impression  thereof,  which  shall  thereupon 
become  the  seal  of  office  of  the  Comptroller 
of  Finance,  and  the  same  may  be  renewed 
when  necessary.  Every  document  exe- 
cuted by  the  Comptroller,  in  pursuance  of 
any  authority  conferred  on  him  by  law,  and 
sealed  with  his  seal  of  office,  shall  be  re- 
ceived In  evidence  in  all  places  and  courts 
whatsoever;  and  all  copies  of  papers  in  the 
office  of  the  Comptroller,  certified  by  him  to 
be  correct  copies  of  the  originals  in  his  of- 
fice, shall  in  all  cases  be  evidence  equally 
and  in  like  manner  as  the  originals.  An. 
impression  of  such  seal  directly  on  the 
paper  shall  be  as  valid  as  if  made  on  wax 
or  wafer. 

Sec.  3.  And  be  it  further  enacted,  that 
there  shall  be  assigned  to  the  Comptroller  of 
Finance,  by  the  Secretary  of  the  Treasury, 
suitable  rooms  in  the  treasury  building  for 
conducting  the  business  of  the  Bureau  of 
Finance,  in  which  shall  be  safe  and  secure 
fireproof  and  burglar-proof  vaults,  in  which 
it  shall  be  the  duty  of  the  Comptroller  to 
deposit  and  safely  keep  all  plates  not  aec- 
essarily  in  the  possession  of  engravers  or 
printers,  and  other  valuable  things  belong- 
ing to  his  department;  and  the  Comp- 
troller shall,  from  time  to  time,  fur- 
nish the  necessary  furniture,  sta- 
tionery, fuel,  lights  and  other  proper  con- 
veniences for  the  transaction  of  the  said 
business. 

Sec.  4.  And  be  it  further  enacted,  that  the 
Comptroller  of  Finance,  under  the  direction 
of  the  Secretary  of  the  Treasury,  is  hereby 
authorized  and  directed  to  issue  a  circulat- 
ing medium  in  the  name  of  the  United 
States  of  America  to  the  amount  of  $20,  in 
addition  to  gold  and  silver  coin,  per  capita, 
of  tin*  population  of  the  census  of  1890, 


•*M»t*4««a0fe4MietN»e«iiwpp««HMMt  Upon  ascer- 
taing  each  following  census,  the  issue  shall 
be  increased  to  120  per  capita,  in  order  to 
furnish  suitable  notes  tor  circulation,  the 
Comptroller  of  Finance  is  hereby  authorized 
and  required,  under  the  direction  of  the 
Secretary  of  the  Treasury,  to  cause  plates 
and  dies  to  be  engraved,  in  the  best  manner 
to  guard  against  counterfeiting  and  fraud- 
ulent alterations,  and  to  have  printed  there- 
from on  paper  or  similar  material  best 
adapted  therefor,  and  numbered  the 
quantity  of  circulating  notes,  of  the  denom- 
inations of  $1,  $2,  $5,  $10,  $20,  $50,  $100  and 
$500,  as  may  be  required  to  supply 
the  issue  herein  called  for.  The 
number  of  each  denomination  issued 
shall  be  such  that  the  needs  of  the  people 
shall  be  best  subserved  thereby.  The  notes 
of  each  denomination  shall  be  consecutively 


numbered  from  No.  1  up;  that  a  duplicate 
of  each  denomination  and  from  each  suc- 
cessive plate  used  shall  be  perforated  with 
the  word  "duplicate,"  and  carefully  pre- 
served for  use  in  the  identification  of  the 
originals,  and  for  the  detection  of  counter- 
feits by  comparison  therewith.  Said  notes 
shall  express  on  their  face  that  they  are 
issued  by  the  Government  of  the  United 
States  of  America  as  the  circulating  medium 
of  the  people  of  the  United  States.  They 
shall  have  the  written  or  engraved  signa- 
tures of  the  Secretary  of  the  Treasury  and 
of  the  Comptroller  of  Finance,  and  the  im- 
print of  the  seal  of  the  treasury,  and  shall 
bear  such  other  statements  and  devices  as  the 
Secretary  of  the  Treasury  shall  direct,  and 
shall  contain  a  statement  that  this  note 
must  be  surrendered  to  the  Comptroller  of 
Finance  in  exchange  for  a  new  note  of  sim- 
ilar denomination  during  the  year  (stating 
the  year  for  retiring  the  same.)  Said 
notes,  with  gold  and  silver  coin 
of  the  United  Slates,  shall  con- 
stitute the  legal  money  of  the  people  of 
the  United  States,  and  shall  be  receiveti  at 
par  in  all  transactions  between  the  United 
States  and  its  inhabitants,  and  between 
the  inhabitants  of  the  United  States.  The 
monetary  use  of  gold  and  silver  coin  of  the 
United  States  under  existing  or  future 
laws  is  not  hereby  interfered  with, 
and  said  notes,  gold  and  silver  coin  shall  be 
exchangeable  at  their  par  value  in  such 
manner  as  shall  best  subserve  the  interests 
of  the  people. 

Sec.  5.  And  be  it  further  enacted,  that  it 
shall  be  the  duty  of  the  Comptroller  of  Fi- 
nance to  receive  worn-out  and  mutilated 
circulating  notes  issued  hereuuder,  and 
with  the  Secretary  of  the  Treasury  the 
Comptroller  of  Finance  shall  compare  said 
notes  with  the  duplicates  thereof  on  file,and 
when  satisfied  that  the  same  are  the  orig- 
inals issued  under  this  act,  they  shall  be 
destroyed  by  being  burned  to  ashes  in  the 
presence  of  the  Secretary  of  the  Treasury 
and  the  Comptroller  of  Finance  and  such 
other  person  as  the  President  shall  desig- 
nate. A  permanent  book  of  record  of  the 
destruction  of  such  notes  with  sufficient 
descriptions  thoreof  shall  be  kept  by  the 
Comptroller  of  Finance  and  published  in 
the  Bulletin  of  Finance.  After  said  destruc- 
tions of  said  notes,  new  notes  of  the  same 
denominations  and  number  shall  be  issued 
to  the  owners  of  the  destroyed  notes,  of 
which  duplicates  shall  be  kept  as  hereinbe- 
fore provided.  Such  new  notes  shall  be 
marked  second  series  or  third  series  as 
the  case  may  be. 

Sec.  6.  And  be  it  further  enacted,  that, in 
the  year  following  each  second  census,  be- 
ginning with  the  census  of  1910,  the  entire 
issue  of  circulating  notes  shall  be  retired 
and  destroyed  as  provided  in  secti&n  5 


herein.  And  under  the  provisions  of  this 
act  a  new  issue  shall  be  made  from  new 
dies  and  plates  and  with  new  designs  and 
shall  be  substituted  for  the  retired  notes. 
And  during  the  year  for  retiring  said  notes, 
each  banking  institution  doing  business 
hereunder  shall,  during  the  months  ot  Jan- 
uary, February,  March  and  April  forward 
to  the  Comptroller  of  Finance  25  per  cent, 
each  month  of  s.iid  notes  in  its  possession, 
and  in  exchange  therefor  the  Comptroller 
of  Finance  shall  issue  notes  ot  the  said  de- 
nomination. *  During  the  remaining  months 
of  the  year  each  of  s*id  banking  institu- 
tions shall  monthly  forward  all  of  the  old 
issue  of  notes  it  may  have  or  receive  to  the 
Comptroller  ot  Finance  for  destruction  and 
exchange.  During  said  remaining  months 
of  said  year  for  retiring  said  old  issue,  any 
person  or  corporation  iiiay  forward  notes 
of  the  old  issue  for  destruction  and  ex- 
change to  the  Comptroller  of  Finance.  Af- 
ter the  expiration  ot  the  said  year  for  the  re- 
tiring of  said  old  issue  of  notes  the  said  old 
issue  shall  cease  to  be  lawful  money  of  the 
United  States,  and  shall  only  be  received 
by  the  Comptroller  of  Finance  for  destruc- 
tion and  exchange,  and  shall  be  so  received 
until  the  outstanding  old  issue  is  entirely 
retired  and  destroyed.  The  dies  and  plates 
used  in  producing  the  old  issue  of 
notes  shall  be  destroyed  by 
fusing  in  fire  in  January  ot 
each  year  of  retiring,  in  the  presence 
of  the  Secretary  of  the  Treasury,  the  Comp- 
troller of  Finance  and  some  person  ap- 
pointed by  the  President.  A  record  of  the 
destruction  of  said  plates  shall  be  kept  in 
the  office  of  the  Comptroller  of  Finance. 

Sec.  7.  And  be  it  further  enacted,  that 
for  the  purpose  of  putting  said  notes  in  cir- 
culation the  Comptroller  of  Fin  ince  shall 
be  authorized  to  redeem  all  outstanding 
notes  or  currency  of  the  United  States  and 
to  receive  legally  issued  bonds  of  > 
counties,  incorporated  cities  of  over  3000 
inhabitants  and  public  school  districts,  said 
bonds  to  be  issued  by  the  States, 
counties,  eitie-i  iind  districts  for  ;i  valuation 
not  to  exceed  5  per  Ci-nt.  of  the  avei;' 

.  value  of  the  real  estate  in  said  M  te, 
county,  city  or  district,  for  the,  tive  years  pre- 
ceding the  issuance  of  said  bonds,  deduct- 
ing from  the  said  issue  of  bonds  the  p  r 
value  of  any  other  outstanding  bonds  i>sin-d 
by  said  State,  county,  city  or  district;  said 
bonds  shall  be  a  lieu  on  all  real  estate  in 
said  State,  county,  city  or  district, 
and  shall  bear  interest  at  the  rate  of 
1  per  cent.  per  year,  and  shall 
not  run  to  exceed  twenty  years.  The 
interest  shall  be  payable  annually  to  the 
Comptroller  of  Finance  at  Washington, and 
an  annual  sinking  fund  shall  be  provided 
sufficient  to  liquidate  sain*  bonds  at  or  be- 
fore maturity.  The  public  issuance  of  such 


bonds,  their  delivery  to  the  Comptroller  of 
Finance  and  the  receipt  of  the  circulating 
notes  therefor  shall  be  deemed  conclusive 
evidence  of  the  leiral  issuance  and  validity 
of  said  bonds,  and  thereafter  no  defense 
shall  beset  up  to  the  payment  of.  principal 
and  interest,  or  to  the  levying  ana  collect- 
Ing  of  taxes  therefor.  All  objections  or 
defense  to  the  issue  of  said  bonds  must  be 
made  by  the  parties  interested  prior  to  the 
delivery  thereof  to  the  Comptroller  of  Fi- 
nance, otherwise  they  are  forever  waived 
and  barrrd  as  a  defense. 

If  said  State,  county,  city  or  district  shall 
fail  or  neglect  at  any  time  to  levy  and  col- 
lect a  sufficient  tax  to  meet  the  obligations 
of  said  bonds,  there  shall  be  immediately 
due  and  payable  to  the  Comptroller  of  Fi- 
nance a  tax  on  the  real  and  personal  prop- 
erty in  said  State,  county,  city  or  district,  in 
default  on  its  last  assessment  roll,  suffi- 
cient to  meet  said  payments  and  costs  of 
collecting  the  same,  and  the  same  shall  be 
collected  by  any  person  or  persons  ap- 
pointed therefor  by  the  Comptroller  of  Fi- 
nance, who  shall  have  power,  where  said 
tax  is  not  paid  within  thirty  days  after  it  is 
levied,  to  collect  the  same  by  seizure  and  sale 
upon  warrant  issued  by  any  judge  exparteof 
any  court  of  original  jurisdiction,  State  or 
national,  having  jurisdiction  of  the  prop- 
erty. The  United  States  may  become  the 
purchaser  of  such  property.  Redemption 
may  be  made  within  one  ye  T  after  sale  by 
paying  the  amount  due  on  the  sale  and  in- 
terest thereon  at  10  per  cent. 

Sec.  8.  And  be  it  further  enacted,  that 
associations  for  carrying  on  the  business  of 
banking  may  be  formed  by  any  number  of 
persons,  not  less  in  any  case  than  five,  who 
shall  enter  into  articles  of  association  which 
shall  specify  in  general  terms  the  proposed 
name  of  tiu3  association,  the  object  for 
whioh  the  association  is  formed,  and 'the 
proposed  capital  stock;  and  may  contain 
any  other  provisions  not  inconsistent  with 
the  provisions  of  this  act,  which  the  associa- 
tion may  see  tit  to  adopt  for  the  regulation 
of  the  business  of  the  association  and  the 
conduct  of  its  affairs,  which  said  articles 
shall  he  signed  by  the  persons  uniting 
to  form  the  association,  and  a  copy  of  them 
forwarded  to  the  Comptroller  of  Finance, 
to  he  filed  and  preserved  in  his  otlicv. 
Attached  to  said  articles  of  association 
shall  be  a  schedule  of  the  real  estate  offered 
as  security  as  herein  provided,  v  hich 
schedule  shall  accurately  describe  said  real 
estate  and  the  improvements  thereon,  stat- 
ing in  whom  the  title  is  vested  in  fee  sim- 
ple, absolute  free  ot  all  incumbrances  or 
liens,  and  giving  the  yearly  assessed  value 
thereof  for  each  separate  year  for  State  and 
county  purposes  for  the  five  precad- 
ing  years,  which  schedule  shall 
ba  certified  to  as  correct  by  the 


6 


proper  keeper  of  the  records  of  title  of  said 
oroperty.  Upon  receipt  of  said  articles 
and  schedule  the  Comptroller  of  Fin  mice 
shall  prwceed  in  whatever  manner  he  deems 
best  to  verify  the  facts  set  out  in  said 
schedule;  and  when  satisfied  that  the  aver- 
age assessed  value  for  said  five  years  next 
preceding  is  at  least  equal  to,  and  the  actual 
value  is  at  least  double  the  proposed  capi- 
tal stock  of  said  bank,  and  that  the  schedule 
is  otherwise  correct  as  to  its  statements,  he 
shall  notify  said  persons  of  that  fact  and  of 
the  name  approved  by  him  for  the  associ- 
ation. 

Sec.  9.  And  be  it  further  enacted,  that 
the  persons  uniting  to  form  such  an  associ- 
ation shall  make  a  certificate  of  organiza- 
tion which  shall  specify: 

First— The  name  assumed  by  the  associ- 
ation. 

Second— The  place  where  its  operations 
of  discount  and  deposit  are  to  be  carried  on, 
designating  the  State,  Territory  or  district, 
and  also  the  particular  county  and  city, 
town  or  village. 

Third— Its  capital  stock  and  the  number 
of  shares  into  which  it  shall  be  divided. 

Fourth — The  names,  citizenship  and 
places  of  residence  of  the  shareholders,  and 
the  number  of  shares  held  by  each. 

Fifth — An  accurate  copy  of  the  schedule 
of  real  est  te  attached  to  the  articles  of  asso- 
ciation provided  for  in  section  8. 

Sixth— A  declaration  that  said  certificate 
is  made  to  euable  such  persons  to  avail 
themselves  of  the  advantages  of  this  act, 
and  that  said  real  estate  is  for  security  as 
required  in  this  act.  The  said  certificate 
shall  be  duly  signed  and  acknowledged  by 
each  of  said  persons  in  the  manner  re- 
quired by  the  law  of  the  place  for  acknowl- 
edging conveyances  of  real  estate  to  entitle 
them  to  be  recorded.  When  duly  certified 
therefor  said  certificate  shall  be  recorded  in 
the  proper  book  of  record  of  the  county  or 
district  in  which  the  real  estate  is  situated ; 
thereafter  no  lien  or  claim  shall  attach  to 
any  of  said  real  estate,  except  such  as  shall 
be  wholly  subordinate  to  the  prior  claim 
under  said  certificate  against  said  real 
estate  for  the  purposes  of  this  act.  When 
duly  recorded  the  said  certificate  shall  be 
transmitted  to  the  Comptroller  of  Finance, 
who  shall  record  and  carefully  preserve 
the  same  in  his  office.  Copies  of  said  cer- 
tificate duly  certified  by  the  Comptroller  of 
Finance  and  authenticated  by  his  seal  of 
office  shall  be  legal  and  sufficient  evidence 
in  all  courts  and  places  within  the  jurisdic- 
tion of  the  Government  of  the  United 
States  of  the  existence  of  said  association, 
and  of  every  other  matter  that  could  be 
proved  by  the  production  of  the  original 
certificate. 

Sec.  10.  And  be  it  further  enacted,  that  no 
association  shall  be  organized  hereunder 


with  a  capital  greater  than  one  million 
dollars  or  with  a  less  capital  than  one  hun- 
dred thousand  dollars.  Such  associations 
shall  be  so  located  as  tc  distribute  the  fundi 
thereof  to  the  best  advantage  of  the  people, 
provided  that  in  any  place  where  the 
population  does  not  exceed  six  thousand 
the  Comptroller  of  Finance  may,  in  his 
discretion,  and  with  the  approval  of  the 
Secretary  of  the  Treasury,  allow  banks  to 
be  established  with  a  capital  of  not  less 
than  fifty  thousand  dollars. 

Sec.  11.  And  be  it  further  enacted,  that 
whenever  a  certificate  of  organization  has 
been  received  and  filed  by  the  Comptroller 
of  Finance,  and  is  found  by  him  to  fully 
comply  with  the  requirements  of  this  act, 
the  Comptroller  of  Finance  shall  proceed  to 
investigate  in  the  manner  deemed  best  the 
personal  standing,  financial  condition  and 
record  of  the  persons  seeking  to  form  the 
association,  also  the  object  of  the  associa- 
tion, the  location  and  value  present  and 
prospective  of  the  real  estate  described  in 
said  certificate  of  organization,  and  any 
other  facts  that  may  aid  him  in  determining 
the  desirability  of  such  an  as- 
sociation and  the  probable  safety 
of  its  business  affairs  and  manage- 
ment. The  Comptroller  of  Finance  may 
use  such  special  means  as  he  deems  best  to 
safely  ascertain  the  facts  abore  referred  to. 
When  it  shall  appear  to  the  satisfaction  of 
the  Comptroller  of  Finance  that  the  associa- 
tion is  lawfully  entitled  to  commence  the 
business  of  banking  with  safety  to  the  Gov- 
ernment and  to  the  people,  he  shall  issue  to 
such  association  a  certificate  under  his  hand 
and  official  seal  that  such  association  has 
complied  with  all  the  provisions  of  this  act 
required  to  be  complied  with,  and  that  such 
association  is  authorized  to  commence  the 
business  of  banking,  designating  the  place 
of  business,  fully  naming  the  directors  and 
officers  thereof  for  the  first  year  and  its  cap- 
ital stock.  The  said  certificate  shall  be 
published  in  such  local  newspaper  for  sixty 
days  as  the  Comptroller  of  Finance  shall 
designate.  From  the  date  of  said  certificate 
said  association  shall  be  deemed  a  body  cor- 
porate to  transact  the  business  of  banking 
hereunder,  with  the  usual  rights,  powers 
and  duties  of  banking  corporations,  and 
shall  exist  for  the  period  of  twenty  years. 
An  impress  of  its  corporate  seal  shall  be 
filed  with  the  Comptroller  of  Finance  and 
with  the  Secretary  of  the  Treasury. 

Sec.  12.  And  be  it  further  enacted,  that 
thereafter  upon  demand  of  the  said  as- 
sociation, the  Comptroller  of  Finance 
shall  issue  to  said  association 
a  warrant  on  the  treasury  of  the  United 
States,  for  circulating  notes  of  the  Govern- 
ment to  the  amount  of  the  capital  stock  of 
said  banking  association,  which  warrant 
upon  presentment,  duly  indorsed,  shall  be 


paid  out  of  the  treasury  in  the  notes  issued 
hereunder. 

Sec.  13.  And  be  it  further  enacted,  that 
the  affairs  of  all  associations  for  banking 
purposes  formed  hereunder  shall  be  man- 
aged by  its  board  of  directors,  which  may 
be  iu  legal  session  on  any  Monday  from  10 
a.m.  where  a  quorum  is  present,  and  on  any 
other  day  where, after  notice,  a  quorum  may 
be  present,  or  to  which  &  regular  session 
may  be  adjourned,  a  quorum  being  present. 
Every  director  shall  be  a  citizen  of  the 
United  States  during  his  whole  term  of 
service,  and  at  least  three-fourths  of  the 
directors  shall  have  resided  in  the  State 
or  Territory  or  district  in  which  such  as- 
sociation is  located  one  year  next  preced- 
ing their  election  or  appointment  as  direct- 
ors, and  shall  be  residents  thereof  during 
their  term  of  office.  Each  director  shall 
own  in  his  own  right  at  least  ten  sh  ires  of 
the  capital  stock  of  the  ssociation.  Each 
director,  when  elected  or  appointed,  shall 
take  an  oath  that  he  will,  so  far  as  the  duty 
devolves  upon  him,  diligently  and  honestly 
administer  the  atfairs  of  such  association, 
and  will  not  knowingly  violate,  or 
willingly  permit  to  be  violated, 
any  of  the  provisions  of  this  act,  and  that 
he  is  the  bona  fide  owner  in  his  own  right 
of  ten  shares  of  the  capital  stock  of  the  as- 
sociation, standing  in  his  own  name  on  the 
books  of  the  association,  and  that  the  same 
is  not  hypothecated  or  in  any  way  pledged 
as  security  for  any  loan,  debt  or  obligation, 
which  oath,  subscribed  by  him  and  duly 
certified  as  required  by  law,  shall  be  imme- 
diately transmitted  to  the  Comptroller  of 
Finance,  and  by  him  filed  and  preserved  in 
his  office. 

Sec.  14.  And  be  it  further  enacted,  that 
the  directors  of  any  association  first  ap- 
pointed shall  hold  office  until  their  succes- 
sors shall  be  elected  and  qualified.  All 
elections  shall  be  held  on  the  second  Tues- 
day of  January  of  each  year,  and  the  direct- 
ors as  elected  shall  hold  their  places  until 
their  successors  are  elected  and  qualified. 
Any  vacancy  occurring  by  reason  of  a  di- 
rector ceasing  to  own  the  required  amount 
of  stock,  or  from  any  other  cause,  shall  be 
filled  by  appointment  by  the  board.  If 
from  any  cause  an  election  shall  not  be 
held  at  the  time  designated,  it  may  be  held 
on  any  subsequent  day  by  publishing  thirty 
days'  notice  t&ereof  in  a  local  daily  paper. 

Sec.  15.  And  be  it  further  enacted,  that 
in  all  meetings  of  the  stock- 
holders each  share  of  stock  shall  be 
entitled  to  one  vote  on  all  questions. 
Shareholders  may  vote  by  proxies,  duly  au- 
thorized in  writing.  None  but  sharehold- 
ers can  use  or  hold  a  proxy. 

Sec.  16.  And  be  it  further  enacted,  that 
the  shares  of  stock  may  be  transferred  on 
the  books  of  the  association  in  such  man- 


ner as  may  be  prescribed  in  the  bylaws  of 
the  association.  No  transter  shall  be  made 
of  stock  where  the  holder  is  indebted  to  the 
as&ociatiou  in  any  manner,  but  the  associa- 
tion has  a  lien  on  all  of  its  stock  for  such 
indebtedness.  Every  person  becoming  a 
shareholder  by  transfer  or  otherwise  shall, 
in  proportion  to  his  shares,  succeed  to  all 
the  rights  and  liabilities  of  the  prior  holder 
of  such  shares,  and  no  change  shall  be  made 
iu  the  articles  of  association  by  which  the 
rights,  remedies  and  securities  of  the  exist- 
ing creditors  of  the  association  shall  be  im- 
paired. The  shareholders  of  each  associa- 
tion formed  under  the  provisions  of  this 
act,  nnd  of  each  existing  bank  or  banking 
association  that  may  accept  the  provisions 
of  this  act,  shall  be  held  individually  re- 
sponsible, equally  and  ratably,  and  not  one 
for  the  other,  for  all  contracts,  debts  and 
engagements  of  such  associations  to  the 
extent  of  the  amount  of  their  stock  therein 
at  par  thereof,  in  addition  to  the  amount  in- 
vested in  such  shares. 

Sec.  17.  Ana  be  it  further  enacted,  that 
the  capital  stock  of  any  association  formed 
hereunder  may  be  increased  or  decreased 
within  the  limits  fixed  for  the  capital  stock 
by  this  act  by  a  two-thirds  vote  of  its  share- 
holders at  any  annual  meeting  in  January. 
The  increase  or  decrease  of  capital  steck 
shall  be  made  by  complying  with  the  re- 
quirements of  this  act  as  to  the  formation 
of  such  associations  in  the  first  instance, 
and  by  complying  with  such  additional  re- 
quirements as  the  Comptroller  of  Finance 
may  deem  best  to  secure  the  interests  of  all 
parties  concerned;  provided,  that  in  the  de- 
crease of  the  capital  stock  the  association 
so  decreasing  its  capital  stock  shall  sur- 
render to  the  Comptroller  of  Finance  cir- 
culating notes  to  the  amount  of  the  de- 
crease. In  such  cases  the  Comptroller  of 
Finance  may  in  his  discretion  release  from 
the  effect  of  this  act  a  pro  rata  of  the  real 
estate  described  in  the  certificate  of  organ- 
ization. But  this  shall  only  be  done  in  cases 
where  the  Comptroller  of  Finance  shall 
find  the  association  to  be  solvent.  The 
maximum  or  minimum  of  such  Increase  or 
decrease  shall  be  determined  by  the  Comp- 
troller of  Finance.  Any  association  organ- 
ized hereunder  may  close  up  its  business 
and  dissolve  its  organization  by  a 
vote  of  its  shareholders  had  at 
the  annual  meeting  in  January. 
In  such  cases  the  association  must  first  set- 
tle all  of  its  outstanding  obligations  and  re- 
turn to  the  Comptroller  of  Finance  circulat- 
ing notes  to  the  amount  of  its  authorized 
capital  stock.  The  Comptroller  of  Finance, 
upon  receipt  of  a  statement  of  the  foregoing 
facts  duly  authenticated  by  the  directors  of 
said  association  under  oath,  shall  fully  in- 
vestigate the  matters  pertaining  thereto.and 
upon  being  satisfied  that  all  obligations  of 


8 


said   association  are  fully  satisfied  and  dis- 
charged,   shall    cause    said  statement  to  be 
published    for    at  least  sixty  days  in  a  local 
newspaper,    ;md    shall    also  cause  a  notice 
thereof  to  be  inserted  in  the  United  States 
Bulletin  of  Finance  for  the  same  period.    If 
any   objections    to    the   dissolution  is  filed 
with  the  Comptroller  of  Finance  before  the 
expiration  of  said   sixty  days  he  shall  deter- 
mine   and    adjust    any  matters  therein  ob- 
jected to;  when  so  adjusted,  or  if  no  objec- 
tions are  filed   with   him,   he  shall  issue  a 
certificate   dissolving   said    association  and 
releasing    the    real  estate   described  in  the 
certificate  of  organization  from  any  further 
claim  or    demand  thereon.    Said  certificate 
of  dissolution   shall  be  by  him  duly  signed, 
sealed  and  acknowledged   so  as  to  entitle 
the  same  to  record  in  the  office  where  the 
certificate    of   organization    was   recorded. 
The  Comptroller  of  Finance  shall  duly  re- 
cord said  certificate  of  dissolution  in  his  of- 
fice,and  thereafter  shall  transmit  the  same  to 
said  association  upon  the  same  being  duly 
recorded  in  the  office  where  the  certificate 
of  organization  was  recorded.    The  associ- 
ation shall  thereby  be  completely  dissolved. 
Sec.  18.  And  be  it  further  enacted,  that  it 
at   any   time   the   value   of  the  real  estate 
described  in  the  certificate  of  organization 
shall  depreciate  in  value,  to  be  decided  by 
the  Comptroller  of  Finance,  he  may  require 
any  portion  of  the  circulating  notes   of  the 
association's  capital  stock  to  be  surrendered 
to  the  Comptroller  of  Finance,  or  he  may 
require  further  real  estate  security  as  in  the 
original     formation     of     the    association. 
Should  the  Comptroller  of  Finance  at  any 
time  deem  the  affairs  of  said  association  un- 
safe   from    any   cause,  he    may  appoint  a 
special   agent  or  agents  under  his  hand  and 
seal  of  office,  who  shall  have  power  to  in- 
spect all  the  affairs  of  said  association  and 
to  close  up  its  affairs  to  the  best  possible 
advantage  to  all  parties  interested.    To  this 
end  he  shall  have  power  to  bring  or  defend 
any  suit  in  the  name  of  the  association  and 
to  sell  at  public  or  private  sale  any  or  all  of 
the  real  estate  described  in  the  certificate  of 
organization,  and  to  execute  proper  convey- 
ances thereof,  and  use  the  proceeds  to  close 
up  the  affairs  of   the  association.     He  shall 
also    have    power    to    collect     from      the 
stockholders      the      amount      for      which 
they  are  responsible  under  this  act  and  to 
use  the  same  to  close  up  the  accounts.    He 
shall  give  such  bonds  for  faithful  perform- 
ance of  his  duties  hereunder  as  the  Comp- 
troller of  Finance  may  require.    His  cer- 
tificate of  appointment  shall    be   duly  ac- 
knowledged and  recorded  as  the  other  cer- 
tificates are  required  to  be.    The  Govern- 
ment shall  be  a    preferred  creditor  in  all 
such  cases  as  are  provided  for  in  this  sec* 
tion. 
Sec.  19.  And  be  it  further  enacted,  that 


the  directors  may  semi-annually  declare 
dividends  from  the  net  profits  of-  the  asso- 
ciation, but  such  association,  before  it  shall 
declare  a  dividend,  shall  carry  at  least  10  per 
cent,  of  its  net  profits  to  a  reserve  fund 
until  said  reserve  fund  shall  equal  the  cap- 
ital stock  of  said  association. 

Sec.  20.  And  be  it  further  enacted,  that  it 
shall  be  lawful  for  any  association  hereun- 
der to  purchase,  hold  and  convey  real  estate 
as  follows: 

First— Such  as  shall  be  necessary  for  its 
immediate  accommodation  in  the  transaction 
of  its  business. 

Second-  Such  as  shall  be  mortgaged  to  it 
in  good  faith  by  way  of  security  for  debts 
previously  contracted  or  for  loans  made 
thereon. 

Third— Such  as  shall  be  conveyed  to  it  in 
satisfaction  of  debts  previously  incurred  in 
the  course  of  its  dealings. 

Fourth— Such  as  it  shall  purchase  at  sales 
under  judgments,  decrees  or  mortgages 
held  by  the  association,  or  shall  purchase 
to  secure  debts  due  to  said  association.  Such 
association  shall  not  purchase  or  hold  real 
estate  for  any  other  purpose  than  as  herein 
specified;  provided,  that  all  such  real  estate 
acquired  other  than  for  the  purpose  of  the 
business  of  the  association  shall  be  sold 
within  five  years  after  it  is  obtained  by  the 
association. 

Sec.  21.  And  be  it  further  enacted,  that  each 
association  may  charge  a  rate  of  interest 
not  to  exceed  4  per  cent,  per  year.  Each  as- 
sociation shall  keep  on  hand  in  cash  an 
amount  equal  to  at  least  25  per  cent,  of  the 
amount  of  its  deposits.  When  this  reserve 
amount  shall  fall  below  said  percentage,  no 
more  dividends  or  loans  shall  be  made  until 
the  amounts  called  in  shall  restore  said  per- 
centage. 

Sec.  22.  And  be  it  further  enacted,  that 
every  association  hereunder  shall  make  to 
the  Comptroller  of  Finance  a  report,  accord- 
ing to  the  form  which  may  be  prescribed  by 
him,  verified  by  the  oath  or  affirmation  of 
the  president  or  cashier  of  such  association, 
which  report  shall,  among  other  things,  ex- 
hibit in  detail,  and  under  appropriate 
heads,  the  resources  and  liabilities 
of  the  association,  and  the  last  assessment 
Valuation  of  its  real  estate,  before  the  com- 
mencement of  business  on  the  morning  of 
the  first  Monday  of  the  months  of  January, 
April,  July  and  October  of  each  year,  and 
shall  transmit  the  same  to  the  Comptroller 
of  Finance  within  five  days  thereafter,  and 
any  bank  failing  to  transmit  such  report 
shall  be  subject  to  a  penalty  of  $100  for 
each  day  after  said  five  days  that  said  re- 
port is  delayed  beyond  that  time.  The 
Comptroller  shall  cause  abstracts  of  said 
reports  to  be  published  in  the  United  States 
Bulletin  of  Finance,  and  the  separate  report 
of  each  association  shall  be  published  by 


9 


the  association  in  a  local  daily  newspaper 
for  at  least  one  week.  Said  association 
shall  forward,  with  each  quarterly  report, 
one-fourth  of  one  per  cent,  of  its  capital 
stock  as  interest  thereon;  and  in  case  of 
default  in  the  payment  thereof  by  any  asso- 
ciation, said  interest  may  be  collected  in 
the  manner  provided  for  the  collection  of 
United  States  duties  of  other  corporations. 
In  addition  to  the  quarterly  reports  required 
herein  every  association  shall,  on  the  first 
Tuesday  of  each  month,  make  to  the  Comp^ 
troller  of  Finance  a  statement,  under  oath  of 
the  president  or  cashier,  showing  the  condi- 
tion of  the  associ.ition  making  such  state- 
ment in  respect  to  the  average  amount  of 
loans  and  discounts,  specie  and  circulating 
notes  on  hand  belonging  to  the  association, 
clearing-house  certificates,  deposits  and 
such  other  matters  as  the  Comptroller  of 
Finance  imy  require. 

Sec.  33.  And  be  it  further  enacted,  that 
no  association  shall  m  tke  loans  or  dis- 
counts on  the  security  of  the  shares 
of  its  own  capital  stock,  nor  be 
the  purchaser  or  holder  of  any  such  shares 
unless  such  security  or  purchase  shall  be 
necessary  to  prevent  loss  upon  a  debt 
previously  contracted  in  good  faith;  and 
stock  so  purchased  or  acquired  shall  be  sold 
within  six  months  from  the  time  of  its  pur- 
chase. But  no  such  purchase  or  feale  shall 
relieve  the  former  owner  thereof  trom  his 
pro  rata  of  responsibility  for  all  debts  in- 
curred by  the  association  prior  to  sale  and 
transfer  to  a  new  purchaser  in  good  faith. 

Sec.  24.  And  be  it  further  enacted,  that 
no  association,  or  any  member  thereof, 
shall,  during  the  time  it  shall  continue  its 
banking  operations,  withdraw,  or  permit  to 
be  withdrawn,  either  in  the  form  of  div- 
idends or  otherwise,  any  portion  of  its 
capital  stock  or  reserve  fund.  And  if  any 
losses  shall  at  any  time  have  been  sustained 
by  any  such  association  equal  to  or  exceed- 
ing its  undivided  profits  then  on  hand  in 
cash,  no  dividend  shall  be  made;  aud  110 
dividend  shall  ever  be  made  by  any  associa- 
tion, while  it  shall  continue  its  banking 
operations,  to  an  amount  greater  than  its 
not  profits  then  on  hand,  deduuctintr  there- 
from its  losses  and  bad  debts,  and  10  per 
cnnt.  for  the  reserve  fund.  And  all  debts 
due  any  association,  on  which  the  interest 
is  past  due  and  ^unpaid  for  a  period  of  six 
months,  unless  the  same  shall  be  well  se- 
cured, and  shall  be  in  process  of  collection, 
shall  be  considered  bad  debts  within  the 
meaning  of  this  act. 

Sec.  25.  And  be  it  further  enacted,  that 
the  president  and  cashier  of  every  such  as- 
sociation shall  cause  to  be  kept  at  all  times  a 
full  and  correct  list  of  the  names  and  resi- 
dences of  all  the  shareholders  in  the  asso- 
ciation, and  the  number  of  shares  held  by 
each,  in  the  office  where  its  business  is 


transacted;  and  such  list  shall  be  subject  to 
public  inspection  during  business  hours  of 
each  day  in  which  business  may  be  legally 
transacted.  A  copy  of  said  list  shall  be 
sent  with  each  quarterly  report  to  the 
Comptroller  of  Finance. 

Sec.  26.  And  be  it  further  enacted,  that 
the  directors  of  any  bank  incorporated 
under  any  national  or  State  law  may,  upon 
the  authorization  of  the  owners  of  two- 
thirds  of  the  capital  stock  in  writing,  duly 
signed  and  acknowledged,  avail  themselves 
of  the  provisions  of  this  act,  and  become  a 
national  association  under  their  corporate 
name  by  complying  with  the  provisions  of 
this  act,  the  said  directors  being  by  said 
vote  authorized  to  execute  all  papers  relat- 
ing thereto.  Any  matters  not  herein  pro- 
vided f«r  in  such  cases  shall  be  adjusted  by 
the  Comptroller  of  Finance  in  accordance 
with  the  spirit  and  intention  of  this  act. 

Sec.  27.  And  be  it  further  enacted,  that 
all  associations  under  this  act,  when  desig- 
nated for  that  purpose  by  the  Secretary  of 
the  Treasury,  shall  be  depositaries  of  pub- 
lic money,  except  receipts  from  customs, 
under  such  regulations  as  may  be  prescribed 
by  the  Secretary ;  and  they  may  also  be 
employed  as  financial  agents  of  the  Govern- 
ment; and  they  shall  perform  all  such  rea- 
sonable duties,  as  depositaries  of  public 
moneys  and  financial  agents  of  the  Govern- 
ment,* as  may  be  required  of  them;  and  the 
Secretary  of  the  Treasury  shall  require  of 
the  association  thus  designated  satisfactory 
security  in  real  estate  for  the  safe-keeping 
and  prompt  payment  of  public  funds  de- 
posited with  them,  and  for  the  faithful  per- 
formance of  their  duties  as  financial  agents 
of  the  Government. 

Sec.  28.  And  be  it  further  enacted,  that 
all  transfers  of  any  of  the  assets  or  any  part 
thereof  of  any  association  doing  business 
hereunder,  made  after  the  commission  of  an 
act  of  insolvency,  or  in  contemplation 
thereof,  with  a  view  to  prevent  the  applica- 
tion of  it  as  assets  in  the  manner  pre- 
scribed in  this  act,  or  with  a  view  to  the 
preference  of  «ne  creditor  to  another,  shall 
be  null  and  void. 

Sec.  29.  And  be  it  further  enacted,  that 
any  director,  officer  or  employ*';  of  any  as- 
sociation organized  hereunder,  who  shall 
knowingly  violate,  or  permit  any  of  such 
persons  to  violate  the  provisions  of  this  act, 
shall  be  removed  forthwith  from  his  posi- 
tion by  the  proper  authority  of  the  associa- 
tion, or  by  the  order  of  the  Comptroller  of  Fi- 
nance. And  any  director,  officer  or  emoloy6 
of  such  association  who  shall  so  transact  the 
business  of  such  association,  or  any  part  of 
it,  as  to  intentionally  defraud  the  associa- 
tion or  any  one  else,  or  with  the  intention 
to  deceive  or  mislead  any  officer  of  the  asso- 
ciation, or  any  agent  appointed  to  examine 
the  affairs  of  any  such  association,  shall  be 


1O 


deemed  guilty  of  a  misdemeanor  and  upon 
conviction  thereof  shall  be  punished  by  im- 
prisonment for  not  more  than  ten  years. 

Sec.  30.  And  be  it  further  enacted,  that 
all  suits  and  proceedings  arising  out  of 
the  provisions  of  this  act,  in  which  the 
United  States  or  its  atrents  or  officers  shall 
he  parties,  shall  be  conducted  by  the  dis- 
trict attorneys  of  the  several  districts,  under 
the  direction  and  supervision  of  the  Solic- 
itor of  the  Treasury.  And  that  all  suits  or 
actions  arising  under  the  provisions  of  this 
act  may  be  had  in  any  circuit,  district 
or  Territorial  court  of  the  United 
States  held  within  the  district  in 
which  such  association  may  be  established, 
or  in  any  State,  county  or  municipal  court, 
iu  the  jurisdiction  of  which  said  association 
is  established  which  has  jurisdiction  in 
similar  cases. 

Sec.  31.  And  be  it  further  enacted,  that 
if  any  person  shall  falsely  make,  forge  or 
counterfeit,  or  cause  or  procure  to  be  made, 
forged  or  counterfeited,  or  willingly  aids  or 
assists  in  forging  or  counterfeiting  any 
note  in  imitation  of  or  purporting  to  be  In 
imitation  of  the  circulating  notes  issued 
under  the  provisions  of  this  act,  or  shall 
pass,  utter  or  publish,  or  attempt  to  p.iss, 
utter  or  publish  any  false,  forged  or  coun- 
terfeited note  purporting  to  be  issued  under 
the  provisions  of  this  act,  knowing  the  same 
to  be  falsely  made,  forged  or  counterfeited, 
or  shall  falsely  alter  or  cause  or  procure  to 
be  falsely  altered,  or  willingly  aids  or  as- 
sists in  falsely  altering  any  such  circulat- 
ing notes  issued  under  the  provisions  of 
this  act,  or  shall  pass,  utter  or  publish,  or 
shall  attempt  to  pass,  utter  or  publish  as 
true  any  falsely  altered  or  spurious  circu- 
lating notes  issued,  or  purporting  to  have 
been  issued  under  the  provisions  of  this 
act,  knowing  the  same  to  be  falsely  altered 
or  spurious,  every  such  person  shall  be 
deemed  and  adjudged  guilty  of  a  felony, 
and  being  thereof  convicted,  shall  be  sen- 
tenced to  be  imprisoned  and  kept  at  hard  la- 
bor for  a  period  of  not  less  than  five  years  nor 
more  than  twenty  years,  and  fined  in  a  sum 
not  exceeding  11000. 

Sec.  32.  And  be  it  further  enacted,  that  if 
any  person  shall  make  or  engrave, 
or  cause  or  procure  to  be  made 
or  engraved,  or  shall  have  in  his 
custody  or  possession  any  plate,  die  or 
block  after  the  similitude  of  any  plate,  die 
or  blocK,  from  which  any  circulating  notes, 
issued  as  aforesaid,  shall  have  been  prepared 
or  printed,  with  intenj,  |o  use  such  plate. 
die  or  block,  or  cause  of* Suffer  the  same  to 
be  used  in  forging  or  counterfeiting  any  of 
the  votes  issued  as  aforesaid,  or  shall  have 
in  Irs  custody  or  possession  any  blank  notes 
engraved  and  printed  after  the  similitude  of 
any  notes  issued  as  aforesaid,  with  intent 
to  use  such  blanks,  or  cause  or  suffer  the 


same  to  be  used  in  forging  or  counterfeit- 
ing any  of  the  notes  issued  as  aforesaid,  or 
shall  have  in  his  custody  or  possession  any 
paper  Adapted  to  the  making  of  such  notes, 
and  similar  to  the  paper  upon  which  any 
such  notes  shall  have  been  issued,  with  in- 
tent to  use  such  paoer,  or  cause  or  suffer  the 
same  to  be  used  in  forging  or  counterfeiting 
any  of  the  notes  issued  as  aforesaid,  every 
such  person,  being  thereof  convicted  by  due 
course  of  law,  shall  be  sentenced  to  be  im- 
prisoned and  kept  at  hard  labor  for  a  term 
not  less  than  five  nor  more  than  twenty 
years,  and  fined  in  a  sum  not  exceeding 
$1000. 

Sec.  33.  And  be  it  further  enacted,  that 
the  Comptroller  of  Finance  shall  cause  to 
be  prepared  each  month  concise  inform  ition 
showing  the  amount  of  circulating  notes  is- 
sued during  the  preceding  month,  and  the 
amount  as  near  as  may  be  of  circulating 
notes,  gold  and  silver  coin,  in  each  State, 
Territory,  district  and  in  the  principal 
cities  of  the  United  States,  and  also  the 
amount  in  the  various  vaults  or  treasuries 
of  the  U nitcid  States;  also  the  amount  ex- 
pended by  the  Government  in  each  State, 
Territory  or  district.  It  shall  also  contain 
the  name  of  each  bank,  the  amount  of  its 
capital  stock,  its  reserve  fund  nd  its  losses 
for  the  preceding  month,  and  such  other 
information  as  shall  be  deemed  of  sufficient 
value  to  the  financial  interest  of  the  people 
to  be  published.  Such  inform  ition  shall  be 
published  monthly  by  the  Department  of 
Printing,  in  pamphlet  form,  of  convenient 
size  for  permanent  binding  in  book  form. 
One  copy  of  each  issue  shall  be  sent  monthly 
to  each  of  the  following  parties:  To  each 
association  doing  business  hereunder,  to 
the  President  and  each  member  of  his  Cab- 
inet, to  each  member  of  Congress  and  to 
such  other  officers  of  the  Government  as  the 
Comptroller  of  Finance  may  di- 
rect; also  to  the  Governor  of 
each  State,  Territory  or  district, 
and  to  each  public  library,  university  or 
college  applying  therefor.  Any  person  may 
have  a  copy  forwarded  to  his  address  for 
one  year  by  first  forwarding  to  the  Comp- 
troller of  Finance  the  sum  of  one  dol- 
lar. All  subscriptions  shall  end  with  the 
December  number  of  each  year  Subscrip- 
tions made  during  the  year  shall  be  at  the 
rate  of  ten  cents  per  copy  for  the  remaining 
months  of  the  year. 

Sec:  34.  And  be  it  further  enacted,  that 
as  the  circulating  medium  shall  accumulate 
in  the  treasury  of  the  Government  from 
revenue  or  otherwise,  it  shall  be  returned 
to  circulation  among  the  people  in  addition 
to  the  ways  hereinbefore  specified,  by  pay- 
ing the  current  expenses  of  the  Govern- 
ment; by  the  purchase  of  suitable  grounds 
and  the  erection  thereon  of  suitable  build- 
ings for  postoffices  and  other  uses  of  the 


11 


Government;  by  the  construction  of  such 
other  woms  as  shall  be  deemed  by  Congress 
for  the  best  interests  of  the  public.  The 
expenditures  shall  be  made  annually,  in 
each  State,  Territory  or  district,  as  nearly 
as  may  be,  in  proportion  to  the  number  of 
its  inhabitants,  provided  that  States  al- 
ready supplied  with  public  buildings  »hall 
not  receive  additional  expenditures  until 
the  other  States,  Territories  or  districts 
shall  have  had  their  equal  proportions. 
All  public  work  shall  be  done  by  days' 
labor,  at  the  rate  of  $1.50  per  day  for  eight 
hours'  work  for  common  labor.  A  less  rate 
shal.l  be  paid  where  the  laborer  is  not  able 
to  perform  a  reasonable  day's  work.  The 
expenditures  hereunder  shall  be  as  directed 
from  time  t<>  time  by  Congress. 

Sec.  35.  And  be  it  further  enacted,  that 
all  notes  issued  hereuuder  and  all  money 
received  by  the  Comptroller  of  Finance 
hereunder  shall  be  deposited  in  the  treasury 
of  the  United  States.  And  the  Comptroller 
of  Finance  shall  keep  an  itemized  account 
of  the  sources  from  which  received,  with  the 
dates  thereof. 

Sec.  tfft.  And  be  it  further  enacted,  that 
all  improvements  on  property  described  in 
the  certificate  of  organization  shall  be  kept 
insured  by  the  association  to  the  full  amount 
of  its  assessed  value,  payable  to  the 
Comptroller  of  Finance,  and  all  insurance 
on  such  property,  in  whatever  name  in- 
sured, shall,  in  case  of  loss,  be  p  ;id  by  the 
insurance  company  to  .the  Comptroller  of 
Finance,  to  be  by  him  disposed  of,  with  the 
consent  of  the  Secretary  of  the  Treasury,  as 
they  may  deem  best  in  the  interest  of  the 
various  parties  concerned. 

Sec.  37.  And  be  it  further  enacted,  that 
it  shall  be  unlawful  for  any  officer  acting 
under  the  provisions  of  this  act  to  counter- 
sign or  deliver  to  any  association,  or  to  any 
other  compiny  or  pers  n,  uny  circulating 
notes  contemplated  by  this  act,  except  as 
herein  provided,  and  in  accordance  with  the 
true  intent  and  meaning  of  this  art.  And 
any  officer  who  shall  violate,  the  provisions 
of  this  secMion  shall  be  deemed  guilty  of  a 
high  misdemeanor,  and  on  conviction  there- 
of shall  be  punished  by  a  tine  not  exceed- 
ing double  the  amount  so  countersigned  and 
delivered,  and  imprisonment  for  not  U-->s 
than  one  year  and  for  not  exceeding  fifteen 

Sec.  38.  And  be  it  further  enacted,  that 
if  the  directors  of  any  association  shall 
knowingly  violate,  or  knowingly  permit  any 
of  the  officers,  agents  or  servants  of  the  as- 
sociation to  violate  any  of  the  provisions  of 
this  act,  all  the  rights,  privileges  and  fran- 
chises of  the  association  derived  from  this 
act  shall  be  thereby  forfeited.  Such  viola- 
tions shall  be  first  determined  and  adjudged 
by  a  proper  circuit,  district  or  Territorial 
court  of  the  United  States,  in  a  suit  brought 


for  that  tmrpose  in  the  name  of  the  Comp- 
troller of"  Finance,  which  decree  shall  ad- 
judge the  association  dissolved.  There- 
upon the  affairs  of  the  association  shall  be 
closed  up  by  the  Comptroller  of  Finance,and 
in  case  of  such  violation,  every  director  who 
participated  in  or  assented  to  the  same  shall 
be  held  liable  in  his  personal  and  individual 
capacity  for  all  damages  which  the  associa- 
tion, its  shareholders,  or  any  other  person, 
shall  have  sustained  in  consequence  of  such 
violation.  Such  directors  shall  thereafter  be 
disqualified  for  the  office  of  director  in  any 
association  formed  hereunder.  And  any 
president,  director,  cashier,  teller,  clerk  or 
agent  of  any  association,  who  shall  embez- 
zle, abstract  or  wilfully  misapply  any  of  the 
moneys,  funds  or  credits  of  the  association, 
or  shall,  without  authority  from  the  direct- 
ors, issue  or  put  forth  any  certificate  of 
deposit,  dr;iw  any  order  or  bill  of  exchange, 
make  any  acceptance,  assign  any  note,  bond 
or  draft,  bill  of  exchange,  mortgage,  judg- 
ment or  decree,  or  shall  make  any  false  en- 
try in  any  book,  report  or  statement  of  the 
association,  with  intent,  in  either  case  to 
injure  or  defraud  the  association,  or  any 
other  company,  body  politic  or  corporate,  or 
any  individual  person,  or  to  deceive  any 
officer  of  the  association,  or  any  agent  ap- 
pointed to  examine  the  affairs  of  any  such 
association,  shall  be  deemed  guilty  of  a  mis- 
demeanor and  upon  conviction  thereof  shall 
be  punished  by  imprisonment  not  less  than 
one  and  not  more  than  ten  years. 

Sec.  39.  And  be  it  further  enacted,  that 
the  Comptroller  of  Finance,  with  the  ap- 
probation of  the  Secretary  of  the  Treasury, 
as  often  as  shall  be  deemed  necessary  or 
proper,  shall  appoint  a  suitable  person  or 
persons  to  make  an  examination  of  the  af- 
fairs of  every  banking  association  formed 
hereuuder,  which  person  or  persons  shall 
not  be  a  director  or  other  officer  or  employe 
in  any  association  whose  affairs  he  shall  be 
appointed  to  examine,  and  who  shall  have 
power  to  make  a  thorough  examination  into 
all  the  affairs  of  the  association,  and,, in  do- 
ing so,  to  examine  any  of  the  officers  and 
agents  thereof  on  oath,  and  shall  make  H 
lull,  detailed  report  ol  the  condition  of  the 
association  to  the  Comptroller.  And  the 
nssoriiiti  n  shall  not  be  subject  to  any  other 
yisitorial  powers  than  such  as  are  author- 
ized by  this  act,  except  such  as  are  vested  in 
the  several  courts  of  law  and  chancery,  and 
every  person  appointed  to  make  such'ex  nn- 
inations  shall  receive  for  his  services  at  the 
rate  of  $5  for  each  day  employed  by  him  in 
such  examination,  and  #2  for  each  twenty- 
five  miles  he  shall  necessarily  travel  in  the 
performance  of  his  duty. 

Sec.  40.  And  be  it  further  enacted,  that 
persons  holding  stock  as  executors, 
guardians,  administrators  or  trustees 
shall  not  be  personally  subject 


to  any  liabilities  as  stockholders,  but  the 
estates  and  funds  in  their  hands  shall  be 
liable  in  like  manner  and  to  the  same  ex- 
tent as  the  testator,  intestate,  ward  or  per- 
son interested  in  said  trust  funds  would  be 
if  they  were  respectively  living  and  compe- 
tent to  act  and  hold  the  stock  in  their  own 
hands. 

Sec.  41.  And  be  it  further  enacted,  that 
hereafter  no  associations  for  the  purpose  of 
banking  shall  be  formed  except  under  the 
provisions  of  this  act,  and  all  banking  in- 
stitutions now  formed  under  the  provisions 
of  prior  acts  of  Congress  shall  be  allowed 
to  continue  under  such  acts  until  their 


proper   term    of    existence    has    expired. 

Sec.  42.  And  be  it  further  enacted,  that 
the  present  Comptroller  of  Cunency  shall 
hereafter  be  known  as  the  Comptroller  of 
Finance  under  this  act,  and  under  such 
name  shall,  with  the  bureau  now  estab- 
lished, perform  all  duties  required  under 
the  various  acts  ot  Congress  relating  to  cur- 
rency or  a  circulating  medium. 

Sec.  43.  And  be  it  further  en  acted,  that  all 
acts  or  parts  of  an  act  in  conflict  with  the 
provisions  of  this  act  are  hereby  repealed, 
and  Congress  may  at  any  time  amend*  alter 
or  repeal  this  act 


This  Act  should  be  based  on  a  Constitutional  Amendment  to  assure  stability 
and  confidence,  substantially  as  follows  : 

ARTICLE  XVI. 

SECTION  1.  A  national  currency  circulating  medium  shall  be  issued  to  the 
amount  of  twenty  dollars  per  capita,  as  shown  by  the  census  of  1890,  and  by  each 
succeeding  census,  for  the  proper  redemption  of  which  when  required,  the 
resources,  the  property  and  the  faith  of  the  nation  are  pledged :  for  which  redemp- 
tion, Congress,  by  a  two-thirds  vote  of  each  House,  may  provide  for  the  collection 
of  Government  revenues  and  taxes  in  gold  or  silver  coin. 

SEC.  2,  Said  currency,  with  gold  and  silver  j^yi^k  the  United  States,  or  such 
notes  as  may  be  issued  in  lieu  of  gold  or  silver  cbifyfexMclusively  for  the  redemption 
thereof,  shall  constitute  the  only  legal  money  of  these  United  States,  and  shall  be 
received  at  par  in  payment  of  all  obligations  within  the  jurisdiction  of  the  United 
States.  Said  gold  and  silver  coin  and  currency  shall  be  exchangeable  at  par 
value. 

SECTION  3.  Congress  shall  have  power  to  enforce  this  Article  by  appropri- 
ate legislation,  but  shall  have  no  power  to  increase  or  decrease  said  issue;  pro- 
vided, that  after  the  issue  of  1890,  Congress  may,  by  a  two-thirds  vote  of  each 
House,  reduce  the  rate  of  any  further  issue  per  capita  Ironi  time  to  time. 


A  NATIONAL  CURRENCY, 

SUPPLEMENTAL  TO  THE  USE  OF  GOLD  AND  SILVER, 

•v.- 

BASED  ON  A  CONSTITUTIONAL  AMENDMENT. 

No   Inflation,  No  Contraction. 

REDEMPTION  WHEN  REQUIRED. 


BY 


R.   M.  WIDNEY, 

OF  Los  ANGELES,  GAL. 


ISSTJE. 


ACCOMPANIED  BY  FULL  TEXT  OF  PROPOSED  LAW 

AND 

CONSTITUTIONAL  AMENDMENT. 


Either  our    circulating   medium  must  be  increased  sufficiently  to  meet  the  wants  of  our 

growing  country,  or  the  business  of  the  country  must  be  killed  off  until 

it    is    within  the  compass  of  our  present  circulation. 


January  15,   1891. 


INDEX 


PAGE 

Danger ! 5 

Efforts  to  Relieve  the  Stringency 5 

Relation  of  Money  to  Business 6 

International  Money  Supply 7 

Financial  Wreckage 8 

More  Circulating  Medium 8 

United  States  System  and  Supply  Outgrown 9 

The  Expansion  of  Business 9 

The  Banking  Nation  of  the  World 9 

The  Volume  Required 10 

Not  Enough  Gold  and  Silver 10 

Financial  Substitutes 11 

Currency 11 

A  Constitutional  Amendment  Necessary 12 

Proposed  Constitutional  Amendment 13 

Preserve  the  National  Bank  System 14 

Farmers'  Alliance  Scheme 15 

Present  Four  Per  Cent.  Bond  System 15 

A  National  Bond  15 

Fifty  Years  Two  Per  Cent.  Bonds  16 

Free  Coinage  of  Silver 16 

Foreign  Silver 17 

Killing  our  Prosperity 17 

Proposed  Legislation 17 

Finances  versus  Politics 18 

Storm  Signals 18 

Danger  Ahead 19 

Copy  of  Proposed  Bill 21 


PREFACE. 


The  following  pages  are  designed  to  furnish  facts  and  sugges- 
tions to  aid  in  the  solution  of  the  present  financial  emergency. 


A    NATIONAL   CURRENCY 

BASED    ON    A    CONSTITUTIONAL  AMENDMENT. 

No  Inflation,  no  Contraction— Redemption  when  Required. 
By  R.  M.  WIDNET,  of  Los  Angeles,  CaL 


DANGER ! 

The  total  amount  owing  by  (8,055)  all  the  banking  institutions  of  the  United 
States  to  depositors  in  July.  1890,  was  $4,603,844,157. 

The  total  cash  in  all  of  these  banks  at  the  same  date,  was: — 

Gold  coin $99,811,011 

Silver,  nickels,  foreign  coin,  etc 28,811,478 

Paper  money 349,694,405 


Total $478,316,694 

Ten  cents  on  the  dollar  on  hand  to  pay  depositors  on  demand  I 

If  gold  were  the  only  legal  tender,  there  would  be  on  hand  only  about  2  cents  on 
the  dollar  for  depositors ! 

Or  if  gold  and  silver  were  combined,  it  would  give  less  than  .03  cents  on  the 
dollar  ! 

By  using  gold,  silver  and  coin  certificates  on  the  United  States  Treasury,  there 
would  be  only  about  5  cents  on  the  dollar  in  cash  for  depositors. 

At  the  same  date  these  banks  had  loaned  out  to  the  people,  $3,893,951,799. 

There  were  then  about  $957,746,248  scattered  in  the  hands  of  62,000,000 
people.  This  represents  only  about  25  cents  on  the  dollar  for  the  people  to  pay  on 
their  loans  to  the  banks.  But  most  of  the  outstanding  money  is  in  the  hands  of 
parties  not  debtors  to  banks. 

It  may  be  safely  estimated  that  the  people  could  not  pay  the  banks  10  cents  on 
the  dollar  in  cash ;  neither  could  the  banks  pay  over  10  cents  on  the  dollar  to 
depositors. 

EFFORTS  TO  RELIEVE  THE  STRINGENCY. 

The  efforts  of  financial  institutions  in  this  respect  were  very  much  the  same  as 
the  general  of  an  army  too  few  in  numbers  to  fight  a  battle.  By  rapidly  moving  a 
part  of  his  forces  from  one  point  to  another  he  tries  to  maintain  strength  at  one  point 
by  weakening  some  other. 

Last  September,  New  York  re6eived  $5,993,000  from  the  interior,  and  the  in- 
terior took  $20,936,000  from  New  York.  August  showed  also  a  large  loss  for  that 
city,  while  November  and  December  drew  millions  more  to  the  interior  as  against 
vastly  smaller  sums  drawn  to  New  York,  so  that  their  reserve  ran  some  $3,000,000 
below  the  limit. 

Financial  reports  constantly  contain  such  statements  as  these:   "Vast  sums  of 


6 

money  are  moving  from  Eastern  cities  to  the  South  and  West."  "  Over  $1,000,000 
was  shipped  to  the  West  to-day."  "Some  $500,000  was  transferred  to  New 
Orleans  to-day."  "  Over  $10,000,000  were  used  to  start  new  banks  in  the  South 
this  year. "  ' '  The  cotton  crop  of  the  South  is  over  $400, 000, 000  per  year. "  "  Dur- 
ing the  last  five  years  over  17,000  new  enterprises  have  been  started  in  the  South, 
embracing  every  variety  of  manufactures." 

Some  32,800  miles  of  railroad  were  built  in  the  United  States  during  the  past 
four  years,  at  a  cost  of  not  less  than  $3,000,000,000,  including  rolling  stock,  etc 
The  money  spent  in  building  towns,  cities,  farms,  and  in  developing  the  resources 
of  this  nation  last  year  is  counted  only  by  billions. 

New  York  City  used  some  $300,000,000  for  building  in  1890. 

Some  financiers  complain  of  this,  and  would  destroy  the  greater  portion  of  all 
this  work,  thereby  throwing  out  of  employment  hundreds  of  thousands  of  laborers. 

It  is  a  strange  comment  on  a  financial  scheme  that,  to  prevent  an  increase  in 
volume  of  money,  we  must  destroy  the  prosperity  of  a  nation  and  reduce  to  star- 
vation or  crime  the  laboring  classes. 

SUMMAKT. 

Banking  Institutions. 

Due  depositors $4,603,844,159 

Cash  with  which  to  pay  ten  cents  on  the  dollar 478,316,694 

Loans 3,893,951  799 

Cash  in  hands  of  the  62,000,000  people  out  of  which  to  pay  the 

loans t 957,746,248 

or  about  25  cents  on  the  dollar. 
A  partial  collection  of  statistics  shows  that  the  volume  of  business 

of  the  United  States  for  the  last  year  was  over 45,000,000,000 

The  money  in  circulation  outside  of  United  States  Treasury  was 

for  the  same  year 1,436,062,942 

of  which  over  $400,000,000  was  held  out  of  circulation  as  bank  reserves,  leaving 
say  $1,000,000,000,  or  2J  cents  on  the  dollar  with  which  to  make  exchanges.  And 
it  may  be  safely  estimated  that  the  business  of  the  United  States  did  not  have  a  circulat- 
ing medium  of  1  cent  on  the  dollar  for  actual  business.  Gold  and  silver  combined 
would  not  give  i  cent  per  dollar  for  business. 

A  past,  present  and  continuing  stringency  under  such  conditions  is  a  necessity. 
And  unless  the  circulating  medium  is  increased  to  a  sufficient  volume  to  meet  the  demands 
of  business,  business  must  be  killed  off  until  it  is  within  the  compass  of  the  volume  of 
money. 

How  strange  that  the  opponents  of  more  money  should  say:  "  The  cause  of  the 
recent  stringency  in  money  is  the  fact  that  there  was  too  much  money.  The  stringency 
is  now  over  unless  Congress  should  issue  more  money." 

EELATION  OF  MONEY  TO  BUSINESS. 

Money  is  used  as  a  means  to  carry  on  business,  and  varies  in  demand  as  busi- 
ness increases  or  decreases.  There  is  a  fixed  relation  between  the  two  which,  if 
disturbed,  must  cause  trouble.  As  the  business,  population  and  area  of  our 
country  increase  the  volume  of  money  must  increase. 

Enterprises  cannot  be  conducted  by  paying  laborers  $2  worth  of  real  estate  or 
produce  per  day.  There  must  be  some  accepted  representative  of  value  to  use  for 
exchange,  and  there  must  be  enough  of  it.  So  long  as  each  locality  is  doing  its 


best  to  fill  its  own  shortage  by  pulling  money  from  some  other  place  that  needs  it, 
and  so  long  as  banks  are  drawing  it  from  customers,  thereby  crushing  them,  to 
save  the  bank,  so  long  as  each  nation  is  borrowing  and  importing  money  from 
some  other  nation,  it  is  useless  to  say  either  there  is  too  much  or  an  abundance  of 
money. 

INTERNATIONAL  MONEY  SUPPLY  AND  DEMAND. 

In  August  last  the  principal  gold  and  silver  coin  andlbullion  was  as  follows: 

Bank  of  England \ $184,600,000 

Bank  of  France 514,500,000 

Deutsche  Eeichsbank 119,000,000 

Austro-Hungarian ,  106,500,000 

Amsterdam 51,500,000 

Bank  of  Belgium 83,500,000 

Bank  of  Spain 53,500,000 


Total $1,113,100,000 

Total  in  United  States,  September 1,153,191,404 


$2,266,591,404 

Each  of  the  above  nations  is  short  of  coin  to-day.  In  October  last  Austro- 
Hungary  wanted  a  loan  of  £20,000,000.  Of  this  the  London  Economist,  in  October, 
said:  "Where  could  any  country,  however  good  its  credit,  obtain  £20,000,000  at 
the  present  time?  On  Friday  last  the  entire  stock  of  gold  in  the  Bank  of  England 
was  only  £19,609,997.  Everybody  knows  England  is  trying  hard  to  get  gold.  The 
Bank  of  Germany  had  on  October  17th  £25,298,000,  and  wants  more.  The  Bank 
of  France  had  51,725,000  francs,  but  is  unwilling  to  part  with  it.  The  attempt  to 
raise  this  sum  to  loan  woidd  give  rise  to  the  most  serious  monetary  disturbance  the 
world  over." 

As  the  newer  nations  rise  to  higher  civilization  they  draw  gold  from  the  supply 
of  older  nations;  that  is,  money  from  the  older  nations  goes  into  the  new  ones 
to  develop  them.  Vast  sums  have  recently  gone  to  Egypt,  Portugal,  South 
America,  and  the  South  and  West  of  the  United  States. 

These  demands  and  outstanding  ones  aggregate  over  $4,400,000,000,  more  than 
double  the  volume  of  coin  in  all  the  leading  nations. 

So  closely  pressed  is  each  nation,  that  recently  when  Russia  withdrew  £17,- 
000,000  from  Baring  Bros.,  it  created  a  money  panic  that  required  the  combined 
money  of  the  Banks  of  England  and  Scotland  to  tide  over,  and  this  was  only  done 
by  the  Bank  of  England  borrowing  from  the^Bank  of  France  some  $15,000,000,  which 
is  not  yet  repaid.  And  now  France  is  putting  a  £36,000,000  loan  on  the  market, 
which  will  draw  nearly  all  the  French  gold  out  of  London.  Russia  temporarily 
returned  to  England,  at  her  request,  the  £17,000,000  previously  withdrawn  from 
Baring  Bros. 

New  York  recently  drew  some  $5,000,000  from  England,  and  then  the  pinch 
cut  further  exportations  short.  Last  month  San  Francisco  tranferred  82,500,000 
to  help  New  York,  and  in  less  than  three  days  the  stringency  was  so  severely  felt 
in  the  former  place  that  the  retransfer  of  money  began.  The  United  States  Treas- 
ury turned  out  over  $200,000,000  to  fill  the  void  in  the  fall  months. 

In  addition  to  the  above,  the  banks  of  New  York  City,  Boston  and  Philadelphia 


8 

issued  over  $30, 000, 000  of  panic  certificates  to  supply  the  WANT,  the  SCAECITT  of 
money,  and  to  prevent  solvent  banks  from  failing. 

In  the  light  of  the  foregoing,  what  shall  we  say  of  those  financiers  who  have 
repeatedly  and  substantially  asserted  that  "the  cause  of  the  recent  stringency  in 
money  was  the  fact  that  there  was  too  much  money.  The  stringency  is  now  over  un- 
less Congress  should  issue  more  money"? 

FINANCIAL  WEECKAGE. 

The  financial  result  of  the  stringency  in  wreck  and  ruin  is  approximately  as 
follows : 

Financial  failures  in  the  United  States,  1890 $190,000,000 

Shrinkage  in  stocks  and  bonds  in  New  York 300,000,000 

In  other  values  it  is  estimated  at  not  less  than 10,000,000,000 

Over  100,000  people  have  been  thrown  out  of  employment,  and  are  to-day 
silently,  patiently  waiting  for  labor  and  bread.  It  is  the  ominous  silence  before  the 
storm.  Men  will  not  starve  in  the  midst  of  plenty.  Self-preservation  is  the  first 
law  of  nature,  as  well  as  of  the  Constitution  of  the  United  States.  Here  is  fuel 
enough  to  make  the  funereal  pyre  of  the  nation,  if  the  torch  of  Socialism  is  once 
fairly  applied. 

True,  this  wealth  is  not  destroyed.  It  has  only  changed  hands.  That  is,  "the 
poor  are  poorer,  and  the  rich  are  richer." 

It  would  seem  that  the  Government  is  run  on  the  theory  that  its  great  work 
was  to  protect  the  money  and  not  the  people,  as  if  man  was  made  for  the  benefit 
of  money,  and  not  money  for  the  benefit  of  man. 

The  following  demands  for  large  loans  are  no  ,v  on  the  market  of  the  world: 

Austro-Hungary $100,000,000 

France 182,000,000 

Mexico . . . . 40, 000,000 

Argentine  Eepublic 500,000,000 

Other  South  American  States 725,000,000 

African  Mines,  Trust  Companies,  etc 350,000,000 

$1,897,000,000 


Other  nations  want  fully  as  much  more,  to  say  nothing  of  local  demands  in 
each  nation. 

MORE  CIRCULATING  MEDIUM. 

The  world  has  outgrown  its  financial  systems  and  money  supply.  Tiie 
demand  from  everyplace  is  voiced  in  one  sentence:  "We  are  short  of  money.'* 
Each  nation  is  calling  in  its  supply  and  bidding  for  more.  In  the  last  decade  the 
whole  world  has  waked  up  to  growth,  development,  civilization,  business  and 
commerce  as  never  before  known  in  the  history  of  the  race. 

The  total  supply  of  gold  and  silver  in  the  world,  coined  and  uncoined,  is  about 
$8,497,011,244,  or  $5.70  per  inhabitant.  The  average  annual  product  is  less  than 
15  cents  per  inhabitant  per  year.  The  circulating  medium  of  our  prosperous 
civilized  nations  is:  for  France,  $42  per  capita;  England  and  Ireland,  $19.49; 


9 

United  States,  $24.     The  circulating  medium  of  England  alone  is  about  $30  per 
capita. 

France  is  safely  and  prosperously  using  842  per  capita,  which  sum  can  be  taken 
as  a  not  unsafe  amount. 

UNITED  STATES  SYSTEM  AND  SUPPLY  OUTGKOWN. 

The  UNITED  STATES  has  outgrown  both  its  system  and  supply.  Its  present 
laws  constitute  only  a  patch-work.  From  August  4,  1790,  to  date  all  laws  on  this 
subject  have  been  to  meet  special  demands,  such  as  the  Revolutionary  wants, 
special  purchases  of  territory,  current  expenses,  private  banks  and  bank  notes, 
the  emergencies  of  the  War  of  the  Rebellion,  redemption  of  the  currency,  and  pay- 
ment of  the  public  debt.  Only  the  amended  fragments  of  these  laws  now  exist, 
and  operate  out  of  harmony  with  the  wants  of  the  people. 

The  London  Times  says:  '•  The  whole  monetary  system  of  the  United  States  is 
in  a  muddle.  This  condition  is  due  to  piecemeal  legislation." 

THE  EXPANSION  OF  BUSINESS. 

The  business  area  of  the  United  States  in  less  than  a  century  has  grown  from 
a  small  area  east  of  the  Alleghanies  to  an  area  from  the  Atlantic  to  the  Pacific;  from, 
some  3,000,000  people  to  over  62, 000,000;  from  a  few  square  miles  of  populated 
territory  to  over  3,400,000  square  miles;  from  ox-carts  and  stage  lines  to  railroads, 
steamships  and  telegraphs;  from  hand-power  and  tread-mills  to  all  the  compli- 
cated implements  and  machinery  of  the  nineteenth  century;  from  business  con- 
fines to  a  few  cities  and  towns  not  distant  from  each  other  to  thousands  of  cities, 
towns  and  villages  scattered  over  a  continent. 

Deducting  from  the  total  volume  the  amount  in  the  United  States  Treasury 
and  in  bank  reserves,  there  is  not  over  $15  per  capita  in  circulation.  Scattered  as 
this  is  over  such  vast  area,  it  cannot  be  rushed  together  at  any  one  point  to  meet 
an  emergency.  When  drawn  to  strengthen  one  point  or  enterprise,  some  other 
one  is  proportionally  weakened. 

THE  BANKING  NATION  OF  THE  WORLD. 

As  other  nations  are  insufficiently  supplied  with  money  for  their  home  use  we 
can  expect  no  help  from  them.  And  why  should  we?  Why  should  we  be  a  money 
dependency  on  any  nation?  We  have  vast  resources  in  gold,  silver  and  other 
wealth.  No  nation  is  now  able  to  furnish  its  own  money  for  it's  people  and  largely 
for  other  nations.  There  is  to-day  an  opening  for  the  United  States  to  become  the 
banker  of  the  world,  as  well  as  for  its  own  people.  Why  should  we  let  slip  this 
wonderful  power  among  men  and  among  nations?  Our  national  wealth  is  estimated 
at  871,000,000,000,  and  we  are  still  in  our  infancy.  An  issue  2  cents  on  the  dollar 
in  currency,  secured  for  redemption  by  a  constitutional  amendment  pledging  the 
faith  and  resources  of  the  nation,  would  give  us  an  issue  of  about  81,400,000,  or 
822  per  capita  in  addition  to  gold  and  silver,  which  would  give  us  a  total  circulation 
of  about  82,500,000,000. 

Our  people  are  paying  over  850,000,000  yearly  as  interest  and  profits  on  foreign 
capital.  Why  should  we  pay  this  sum  to  foreigners,  when  we  can  furnish  our 
entire  volume  of  money  and  pay  interest  to  ourselves?  Why  are  we  to  consider  it 
a  privilege  to  have  foreign  capital  come  in  and  occupy  the  place  of  our  own  money? 
Or  if  we  have  enough  of  our  own  (as  some  assert),  why  doe's  nearly  81,500,000,000 
of  foreign  money  come  in  at  our  solicitation  to  buy  up  our  best  enterprises  and 


10 

drain  our  profits  abroad?  The  present  invested  foreign  capital  will  in  about  fifteen 
years  draw  from  us  in  interest  about  $1,500,000,000,  still  leaving  us  in  debt  the 
principal,  $1,500,000,000. 

THE  VOLUME  REQUIRED. 

Any  system  adopted  by  Congress  should  be  ample.  Neither  inflation  nor 
contraction  should  remain  as  •  elements  of  disturbance.  As  our  Supreme  Court 
decisions  now  stand,  there  is  no  limit  to  the  power  of  any  Congress  to  inflate  the 
currency  or  contract  to  any  extent. 

From  this  power  has  come  the  dangers  that  have  wrecked  national  paper  money 
schemes  of  the  past,  and  sooner  or  later  will  wreck  those  of  the  future.  A  consti- 
tutional amendment  fixing  the  volume,  per  capita,  and  providing  for  an  increase 
at  each  census,  leaving  vested  in  Congress  by  a  two-third  vote  of  each  House  the 
power  to  omit  or  decrease  additional  issue  at  each  census,  and  pledging  our 
national  wealth  and  honor  for  redemption  when  required,  would  give  us  a  stable 
currency  as  well  as  an  elastic  currency. 

Such  an  amendment  is  hereinafter  suggested. 

The  volume  should  be  of  such  a  character  that  our  National  Treasury  could  hold 
25  per  cent,  of  it  as  a  reserve,  that  a  similar  reserve  of  25  per  cent,  of  the  total  bank 
deposits  of  the  United  States,  as  shown  by  statistics,  should  be  provided  for. 
After  making  a  reasonable  allowance  for  destruction  and  hoarding,  there  should  be 
an  ample  allowance  for  the  current  business  of  the  people. 

The  aggregate  bank  deposits,  not  counting  savings  banks,  as  shown  by  official 
report,  is  about  $2,516,179,807.  A  United  States  Treasury  reserve  of  25  per  cent, 
of  this  would  be  $629,043,951,  using  a  similar  reserve  for  the  National  Banks, 
$629,043,951.  These  figures  would  fix  the  total  volume  at  the  aggregate  of  the 
deposits. 

This  would  be  about  $40  per  capita,  in  gold,  silver  and  currency.  The  French 
nation  has  a  volume  of  $42  to  $44  per  capita,  and  are  prosperous  and  safe  in  finances. 
The  figures  used  by  them  should  not  be  considered  too  great  for  us.  Our  present 
gold  and  silver  coin  is  $1,100,712,432.  Deducting  this  amount  from  the  above 
suggested  volume  leaves  $1,415,463,375  as  the  amount  to  be  provided  for  in  cur- 
rency and  new  coinage  of  gold  and  silver. 

The  reported  yield  of  our  mines  last  year  was:  gold,  $32,800,000  ;  silver,  $46,- 
750,000  ;  total,  $79,550,000.  Out  of  this  there  were  used  for  industrial  purposes, 
of  gold,  $16,697,000  ;  silver,  $8,767,000  ;  total,  $25,464,000  ;  balance  left  for  coinage 
would  be  $54,086,000  per  year.  This  volume,  if  coined  each  year,  would  give  about 
$20  per  capita  for  the  increase  of  population.  This  would  leave  about  $1,400,000,- 
000  to  be  provided  for  in  currency,  or  say  $22  per  capita. 

NOT  ENOUGH  GOLD  AND  SILVER. 

The  total  amount  of  gold  in  the  United  States  in  coin  is  $631,801,6$9;  uncoined 
is  $63,063,981;  total,  $694,865,680,  or  $11  per  capita.  The  annual  product  is 
$32,800,000,  or  about  50  cents  per  capita.  The  annual  consumption  of  gold  for 
the  arts  in  the  United  States  alone  is  about  $16,697,000,  balance  for  coining,  25 
cents  per  capita.  It  is  therefore  the  maximum  of  financial  stupidity  to  assert  that 
gold  alone  can  do  the  financial  work. 

SILVER. — The  total  amount  of  silver  in  the  United  States  in  coin  is  about 
$458,134.067;  uncoined,  is  $27,236,440;  total,  $485,370,497,  or  about  $8  per  capita. 
The  annual  product  is  $46,750,000,  or  74  cents  per  capita.  The  annual  consump- 


11 

tion  of  silverin  the  arts  is  $8,767,000;  balance  for  coming,  per  capita,  60  cents.  It 
is  apparent,  therefore,  that  silver  cannot  even  approximately  meet  the  demand. 

Gold  and  silver  combined  could  only  give  about  $19  per  capita  for  a  circulat- 
ing medium,  with  an  annual  increase  of  85  cents  per  capita  for  both. 

With  France  using  $44  per  capita,  and  England  $30,  and  the  United  States  824, 
and  each  demanding  more,  it  is  apparent  that  the  two  combined  would  only  yield 
about  three-fourths  the  volume  now  in  use  in  the  United  States,  and  less  than 
one-half  of  the  amount  now  used  in  France  with  safety. 

Upon  the  issue  of  this  money  the  Treasury  could  retire  all  outstanding  paper 
money,  except  gold  and  silver  certificates.  There  would  be  left  a  net  increase  of 
volume  of  about  $800,000,000.  Under  Sections  7,  12  and  34  of  the  accompanying 
Bill,  this  volume  would  soon  find  its  way  into  the  business  of  the  country. 

FINANCIAL  SUBSTITUTES. 

The  December  report  of  the  the  Comptroller  of  Currency  shows  that  the  financial 
world  has  been  forced  for  years  past  to  transact  about  92  per  cent,  of  the  volume 
of  business  in  checks,  Clearing  House  certificates  and  other  evidences  of  value  for 
want  of  money.  Every  promissory  note,  mortgage  and  credit  is  a  method  or 
instrument  to  help  increase  the  volume  of  money. 

What  is  a  United  States  legal  tender  note?  It  is,  in  money  effect,  the  Clearing 
House  certificate  of  the  nation,  backed  by  the  wealth  of  the  nation,  good  in  any 
clearing  house  in  the  United  States,  instead  of  a  certificate  backed  by  a  few  banks 
and  only  good  where  they  wish  to  accept  it  by  courtesy.  It  is  the  check,  signed 
by  the  people  of  the  United  States,  backed  by  over  $71,000,000,000  of  the  people's 
wealth,  good  at  any  counter  of  any  bank,  instead  of  a  private  individual's  check 
only  good  at  his  own  bank  and  in  his  own  locality.  It  is  the  promissory  note  of 
the  nation,  secured  by  a  constitutional  mortgage  on  over  3,400,000,000  acres  of 
land,  with  the  improvements  and  personal  property  thereon,  valued  at  $71,000,- 
000,000,  payable  to  bearer,  and  good  to  any  creditor  from  any  debtor,  instead  of 
the  private  note  of  a  citizen  secured  by  mortgage  on  a  few  acres  and  only  good  at 
a  discount,  or  exchangeable  for  gold  or  silver,  or  present  coin  certificates,  to  any 
one  who  needs  coin.  It  is  a  representative  of  value  for  exchange  purposes,  mutu- 
ally agreed  upon  by  62,000,000  people  for  their  joint  benefit. 

CURRENCY. 

Statistics  show,  therefore,  that  the  use  of  gold  and  silver  must  be  supplemented 
by  paper.  This  has  been  done  in  all  historic  ages  in  the  form  of  individual  paper 
obligations,  bank  obligations  and  national  obligations.  The  whole  class  of  prom- 
issory notes,  checks,  bills  of  exchange,  drafts,  Clearing  House  certificates,  bank 
notes,  national  bonds  and  currency  notes  are  supplemental  currency,  representative 
of  value  for  purposes  of  exchange. 

In  times  of  prosperity  and  confidence  business  runs  far  beyond  all  hitherto 
furnished  national  supply  of  circulating  mediums. 

What  is  the  result  ?  Individuals  try  to  supplement  the  demand  and  issue 
promissory  notes,  checks  and  other  private  obligations.  The  banks  allow  credits, 
notes,  overdrafts,  and,  as  a  last  resort,  "panic  certificates,"  all  to  supplement  and 
augment  the  volume  of  circulating  medium.  As  they  are  curtailed,  the  crash 
comes,  and  failures  reduce  to  poverty  and  ruin  those  who  are  first  called  on  to 
turn  their  personal  circulating  medium  into  the  national  medium.  And  this  pro- 


12 

cess  must  continue  until  the  business  of  the  people  is  killed  off  and  brought  within 
the  volume  of  the  national  legal  tender. 

The  great  question  before  each  nation,  and  especially  our  own,  is  to  furnish  a> 
volume  of  legal  tender  backed  up  by  the  wealth  of  the  nation,  to  replace  a  large 
amount  of  the  dangerous  substitutes  of  personal  and  bank  notes,  checks,  drafts, 
"panic  "  certificates,  etc. 

Statistics  show  that  over  92  per  cent,  of  the  volume  of  business  the  past  year 
was  forced  to  be  transacted  in  these  lowest  and  most  dangerous  forms  of  a  circulat- 
ing medium. 

It  is  in  them  the  wreck  has  occurred,  and  not  in  the  currency.  How  could 
we  have  clearer  proof  of  the  insufficiency  of  the  volume  of  money  than  by 
showing  that  the  whole  financial  crash,  every  dollar  of  it,  has  occurred  in  those 
personal  and  bank  substitutes  for  money  ?  How  can  we  better  demonstrate  what 
cure  should  be  than  to  substitute  a  national  volume  of  circulating  medium  backed 
by  the  wealth  of  the  nation,  a  legal  tender,  in  place  of  the  irresponsible  individual 
and  bank  substitutes,  with  only  the  fleeting  wealth  of  the  bank  or  individual 
back  of  it  ? 

PRIVATE  BANK  notes  have  failed  along  these  lines  for  want  of  national  back- 
ing. The  present  National  Bank  system  is  the  best  yet  devised.  But  why  should 
our  nation  issue  to  these  banks  a  private  note  secured  by  bonds  deposited  with  the 
Government  as  collateral  security  for  redemption  ? 

What  is  the  use  of  the  National  Bank  note  fifth  wheel  ?  Why  should  not  the 
nation  issue  its  own  legal  tender,  backed  by  the  resources  of  the  nation  for  redemp- 
tion, and  loan  it  direct  to  National  Banks  on  the  same  bond  or  other  equally  safe 
collateral  ? 

The  circulating  medium  would  then  be  uniform  and  of  known  value,  the  Gov- 
ernment always  holding  a  reserve  volume  sufficient  to  meet  the  fluctuating  volume 
demanded  by  trade  in  different  localities  at  different  seasons  of  the  year. 

Sections  8,  9,  10,  11,  12  and  22  of  the  accompanying  proposed  law  show  in 
italics  a  complete  and  safe  system  to  meet  the  actual  wants  of  our  nation. 

A  CONSTITUTIONAL  AMENDMENT  NECESSAEY. 

No  system  of  national  finance  can  successfully  meet  the  wants  of  business  unless 
it  is  protected  from  all  dangerous  contingencies. 

The  United  States  Supreme  Court  first  decided,  by  five  Justices  to  three,  that 
Congress  had  no  constitutional  power  to  make  money  a  legal  tender.  One  of  the 
five  resigned,  and  Congress  added  one  more  to  the  number  of  the  Court,  and  under 
the  new  arrangement,  five  Justices  held,  as  a  war  power,  it  was  constitutional,  while 
the  original  four  still  held  it  unconstitutional.  Three  of  those  four  Justices  have 
died,  and  now  eight  out  of  the  nine  hold  that  Congress  can,  in  peace  or  war,  make 
anything,  in  any  quantity,  a  legal  tender. 

If  the  Administration  changes,  new  Justices  can  hold  as  did  the  original,  that 
Congress  has  no  power  to  make  paper  money  a  legal  tender.  Until  that  time,  Con- 
gress can  cause  inflation  or  contraction  to  a  dangerous  extent.  Or,  as  France  did, 
issue  volumes  of  paper  money  on  a  gold  basis,  and  then  bisect  or  quarter  the 
gold  dollar  so  that  one  dollar  in  gold  would  redeem  from  two  to  four  dollars  of  the 
paper  issue. 

To  make  the  paper  money  permanently  useful,  it  must  have  from  the  first  a 
fixed  an<J  permanent  value  with  gold;  its  volume  must  be  circumscribed  with  impas- 
sable limits;  it  must  be  secured  by  an  irrevocable  pledge  of  national  faith  and 


13 

wealth;  it  must  be  exchangeable  at  par  for  gold  or  silver,  and  a  legal  tender  for 
all  debts. 

No  date  need  be  fixed  for  redemption;  for  redemption  would  only  require  anew 
issue  to  take  its  place.  Provisions  for  redemption,  when  required  by  a  two-thirds 
vote  of  each  House,  would  be  ample. 

All  of  these  points  would  be  secured  by  an  amendment  about  as  follows  : 

CONSTITUTIONAL  AMENDMENT. 
ARTICLE  XVI. 

SECTION  1.  A  national  currency  circulating  medium  shall  be  issued  to  the  amount 
of  twenty  dollars  per  capita,  as  shown  I  >y  the  census  of  1890,  and  by  each  succeed- 
ing census,  for  the  proper  redemption  of  which  when  required,  the  resources,  the 
property  and  the  faith  of  the  nation  are  pledged  ;  for  which  redemption,  Congress, 
by  a  two-thirds  vote  of  each  House,  may  provide  for  the  collection  of  Government 
revenues  and  taxes  in  gold  or  silver  coin. 

SECTION  2.  Said  currency,  with  gold  and  silver  coin  of  the  United  States  of 
present  weight  and  fineness,  or  such  notes  as  may  be  issued  in  lieu  of  gold  or  silver 
coin,  held  exclusively  for  the  redemption  thereof,  shall  constitute  the  only  legal 
money  of  these  United  States,  and  shall  be  received  at  par  in  satisfaction  of  all 
obligations  for  the  payment  of  money  within  the  jurisdiction  of  the  United  States. 
Said  gold  and  silver  coin  and  currency  shall  be  exchangeable  at  par  value. 

SECTION  3.  Congresss  shall  have  power  to  enforce  this  Article  by  appropriate 
legislation,  but  shall  have  no  power  to  increase  or  decrease  said  issue;  provided, 
that  after  the  issue  of  1890,  Congress  may,  by  a  two-thirds  vote  of  each  House, 
reduce  the  rate  of  any  further  issue  per  capita  from  time  to  time. 

Underlying  a  national  system  of  finance,  this  would  give  us  the  best  foundation 
ever  yet  adopted  by  any  nation.  The  weight  and  fineness  of  our  coin  dollar  could 
not  be  varied. 

The  constitutionality  of  the  medium  never  could  be  questioned. 

The  volume  is  protected  against  inflation,  contraction  or  repudiation,  and 
provides  for  a  fixed  increase  at  each  census  to  meet  increased  population,  if 
required. 

It  pledges  the  resources,  "  the  property  and  the  faith  of  the  nation  "  for  redemp- 
tion when  required. 

This  represents  an  issue  of  2  cents  on  the  dollar  of  our  national  wealth  of 
some  3,400,000,000  acres,  and  personal  property  valued  at  $71,000,000,000. 

This  is  a  national  first  mortgage  to  secure  redemption.  With  such  security  the 
national  notes  would  be  considered  gilt  edged  paper  in  any  market  in  the  world. 
They  would  be  received  in  any  nation  more  readily  than  Bank  of  England  notes 
are  to-day. 

No  special  call  will  exist  for  gold  to  pay  national  taxes  or  revenues. 

As  gold,  silver  and  currency  are  exchangeable  at  par  as  required,  the  situation 
would  be  about  as  at  present.  No  one  would  call  for  gold  or  silver,  but  would 
take  paper  money  or  certificates  for  the  coin,  except  in  a  few  special  cases.  For 
this  reason  large  sums  of  gold  and  silver  would  always  lie  in  the  United  States 
Treasury,  as  at  present,  ready  for  any  exchange  required  by  business. 

This   allows   the  Governmant  to   buy   gold   and   pilver  at   market  rates  for 
age. 

e  profit  between  purchase  price  and  coinage  value  would  be  the  profit  of 
whole  people. 


14: 

PRESERVE  THE  NATIONAL  BANK  SYSTEM. 

A  bank  system  in  the  United  States  is  a  commercial  necessity.  Every  indi- 
vidual cannot  erect  burglar  and  fire-proof  vaults  to  protect  his  money.  Neither 
could  he  employ  a  set  of  clerks  to  keep  his  accounts  and  financial  exchanges. 

The  banks  to-day  use  the  smallest  floor  space  on  which  the  business  could  be 
transacted,  and  also  have  their  working  force  reduced  to  the  lowest  number.  The 
work  could  not  be  done  by  the  Government  with  any  less  floor  space  or  with  any 
less  number  of  persons. 

Nothing  could  be  gained  by  destroying  the  present  system,  with  all  of  its 
organized  and  trained  forces,  and  replacing  it  with  any  Government  scheme  for 
commercial  banking  or  loaning. 

The  scope  and  flexibility  of  the  present  system  could  be  vastly  improved  by 
some  such  arrangement  as  the  following: 

Allow  States,  counties  and  cities  of  say  5,000  population  or  over,  where  they  need 
money  for  public  improvements,  to  issue  2  per  cent,  bonds  for  twenty  to  thirty 
years  to  the  amount  of  5  per  cent,  of  the  assessed  value  of  the  real  estate.  Allow  the 
United  States  to  buy  these  bonds,  prohibiting  any  contest  as  to  their  validity  after 
receipt  of  the  money  therefor.  Let  the  Treasurer  sell  these  bonds  to  any  National 
Bank  wishing  to  purchase  them,  and  allow  them  or  any  United  States  bonds  to  be 
used  as  a  deposit  security  with  the  United  States  Treasury  on  which  to  draw 
money  when  additional  sums  are  required  by  any  bank.  The  large  reserve  always 
held  by  the  United  States  Treasury  would  be  the  fund  from  which  this  would  be 
drawn,  and  to  which  this  would  be  returned  when  not  needed.  This  would  give  a 
perfect  elastic  currency  to  meet  all  expansions  or  contractions  of  season  trade. 
Real  estate  could  also  be  safely  used  as  a  reserve,  as  shown  under  the  head  of 
Farmers'  Alliance  Scheme  hereafter. 

The  economic  of  this  plan  are  that  States,  counties  and  cities  wanting  to  bor- 
row money  and  pay  interest  could  borrow  of  the  people  who  have  the  national 
money  to  loan,  and  banks  could  buy  such  bonds  to  use  in  their  system. 

Our  system  of  national  finances  should  be  so  arranged  that  renewed  supplies  of 
money  seeking  loans  in  the  hands  of  one  class  of  people  could  be  obtained  by  that 
other  class  requiring  the  use  of  money.  This  can  best  be  done  by  our  Government, 
which  is  over  62,000,000  people,  issuing  a  full  volume  of  gold,  silver  and  currency, 
which  is  the  property  of  all  the  people,  to  be  used  by  them  as  a  representative 
basis  of  values  for  exchange. 

A  large  reserve  held  idle  in  its  vaults  by  the  Government  is  for  the  benefit  of 
the  people,  to  be  sent  at  one  time  (like  a  reserve  force  of  an  army)  to  the  support 
of  this  place  and  then  to  other  places.  This  reserve  system  will  meet  all  demands 
for  an  elastic  currency. 

The  people,  through  the  Government  issuing  and  holding  this  medium  of  ex- 
change for  their  own  use  and  benefit,  share  its  profits  and  losses  for  the  community 
as  a  whole. 

The  only  remaining  point  is  to  provide  a  proper  means  by  which  the  people 
may  obtain  the  use  of  this  money  as  needed. 

This  must  be  done  by  banking  principles,  either  applied  by  the  Government  or 
by  banks. 

If  the  Government  attempts  this  work,  it  will  require  as  much  floor  space  as  the 
banks  now  use,  and  as  many  and  as  able  employees  as  are  now  engaged  by  all  the 
banks. 


15 

That  a  profit  may  arise,  the  banks  are  now  run  on  the  most  economical  basis 

possible. 

FARMERS'  ALLIANCE  SCHEME. 

This  scheme  has  some  sound  points  in  it.  Land  can  be  safely  used  as  a  secur- 
ity in  the  National  Bank  system  as  well  as  bonds.  Allowing  the  title  to  land  at  a 
valuation  of,  say,  its  average  assessed  value  for  the  preceding  five  years  and  not  to 
exceed  one-half  of  its  cash  value  to  be  pledged  to  the  Government  under  the  form 
of  a  National  Bank  incorporation,  would  give  relief  to  the  farming  communities. 
It  would  substitute  a  National  Bank  for  a  Sub-Treasury  ;  a  set  of  bank  officers  to 
manage  the  loans  for  a  set  of  Sub-Treasury  agents;  a  responsibility  to  the  Gov- 
ernment for  large  aggregate  sums  under  the  bank  laws  instead  of  the  inspection  of 
thousands  of  small  changing  loans.  The  supervision  of  the  Bank  Examiners  under 
present  laws  as  to  the  solvency  of  the  bank  would  be  all  that  was  required,  while 
the  bank  officers  would  supervise  all  detail  business  and  loans  to  individuals. 

Section  8  of  the  proposed  Bill  covers  the  foregoing  points. 

Section  22  provides  that  for  the  first  $100,000  drawn  as  above,  the  interest  to 
the  nation  shall  be  1  per  cent.  The  rate  increases  on  larger  sums  as  follows:  2  per 
cent.,  3  per  cent.,  4  per  cent.,  5  per  cent.,  6  per  cent!,  7  per  cent.,  8  per  cent.,  10 
per  cent. 

The  object  of  this  is  to  prevent  reckless  drawing  and  using  at  low  rates. 

Tho  lower  rates  will  develop  the  legitimate  industries  of  the  country.  The 
higher  rates  will  check  the  wild,  rash  enterprises  of  speculation,  and  furnish  means 
to  carry  on  business  with  less  profit  or  loss  until  adjustments  occasion  regular 
business  routine. 

This  is  the  same  principle  applied  the  world  over  in  finances.  The  Bank  of 
England  raised  its  rate  of  discount.  So  did  other  European  financial  institutions. 
The  same  thing  was  done  in  New  York  recently.  It  is  the  natural  law  on  the  sub- 
ject for  checking  speculation  without  killing  off  legitimate  business,  and  is  here 
used. 

This  plan  is  adopted  in  the  recent  German  law  establishing  a  system  of  more 
liberal  and  modern  financiering. 

PRESENT  FOUR  PER  CENT.  BOND  SYSTEM. 

The  present  bond  system,  as  applied  to  the  use  of  banks,  is  a  financial  ab- 
surdity. 

For  a  bank  to  secure  circulating  notes  of,  say,  $90,000,  its  stockholders  must 
take  $125,000  cash  now  in  circulation  and  buy  $100,000  in  United  States  bonds, 
and  then  depositing  them,  borrow  of  the  United  States  $90,000  to  use  in  its  busi- 
ness. If  the  bond  element  is  dropped  out,  the  bank  could  have  used  $90,000  of  its 
$125,000  for  the  same  purpose  and  have  $35,000  to  start  a  respectable  country 
bank  with. 

As  an  original  war  scheme,  selling  bonds  by  the  United  States  to  get  money 
was  a  necessity.  Then  allowing  them  to  be  used  as  a  basis,  in  the  hands  of  the 
owners,  to  increase  the  circulating  medium  was  wisdom.  But  for  non-holders  to 
use  cash  on  hand  to  buy  them  up  at  a  premium  to,  get  back  less  circulating  me- 
dium than  they  cost,  for  the  avowed  purpose  of  increasing  the  circulation,  is,  to  say 
the  least,  passing  strange. 

A  NATIONAL  BOND. 

If  at  any  time,  by  reason  of  war,  or  national  purchase  of  territory,  or  vast  pub- 
lic improvement,  the  nation  needed  money,  it  could  issue  its  bonds  as  in  times 


16 

past,  and  sell  them  for  money  to  meet  the   demand.     Such  bonds  would  work  in 
under  the  proposed  plan  with  perfect  adjustability. 

These  bonds  again  could  become,  in  case  of  emergency,  a  basis  for  a  national 
bank  issue,  as  at  present,  of  bank  notes  not  a  legal  tender. 

FIFTY-YEAR  TWO  PEE  CENT.  BONDS. 

How  would  this  practically  work  out  ?  The  owner  of  4  or  4£  per  cent,  bonds 
would  not  exchange  them  for  2  per  cent,  bonds  at  par. 

To  sell  the  2  per  cent,  bonds  and  leave  the  money  idle  in  the  Treasury  until  the 
4  per  cent,  bonds  matured,  would  be  to  pay  double  interest.  To  buy  up  the  4  per 
cent,  bonds  at  their  premium  or  interest  until  due,  is  just  as  great  a  loss.  If  sold 
to  banks  as  a  basis  of  note  issue,  the  results  are  even  worse.  To  illustrate:  the 
"United  States  issues,  say,  $100,000  in  fifty-year  2  per  cent,  bonds.  You  wishing 
to  open  a  National  Bank,  must  take  8100,000  cash  circulating  medium  and  buy  the 
$100,000  bonds.  Next  you  deposit  these  bonds  with  the  United  States  and  get  back 
your  8100,000  cash  for  a  bank  capital,  and  for  fifty  years  the  people,  through  the  Gov- 
ernment, pay  you  2  per  cent,  per  year  on  the  bonds  for  doing  a  banking  business  on 
your  own  original  $100,000.  That  is,  at  the  end  of  fifty  years  the  United  States 
has  paid  you  8100,000  interest— /or  what?  Or  if  you  annually  use  the  interest 
paid  you  on  your  bonds  to  buy  new  bonds,  so  as  to  make  it  compound,  you  will 
own  your  original  capital,  8100,000  +  8100,000  interest  -f  about  870,895  bonds 
bought  with  interest  on  interest.  Total,  8170,895  profit  presented  to  you  for  doing 
business  on  your  own  money. 

On  the  present  banking  capital  of  about  8700,000,000  now  in  the  United  States, 
the  banks  would  hold  at  the  end  of  fifty  years  8700,000,000  capital  +  81,196,- 
265,000  paid  to  the  banks  for  doing  business  on  their  own  capital.  As  the  voters  are 
the  payers  and  the  banks  the  payees  in  the  above  scheme,  there  would  probably 
be  objections  raised. 

The  bonds  do  not  increase  money,  but  are  used  to  buy  money  already  issued 
from  the  people,  and  in  fact  first  contract  the  circulating  medium,  and  then,  as 
paid  out  by  the  United  States,  only  restore  it  to  its  former  volume,  which  was  too 
small,  and  which  was  f  utilely  attempted  to  be  increased  by  a  bond  issue. 

If  deposited  with  the  United  States  Treasurer  and  notes  issued  to  90  per  cent., 
or  even  par,  there  is  only  restored  the  amount  paid  for  them. 

Or  if  a  new  issue  is  made  as  at  present  of  National  Bank  notes,  not  a  legal 
tender,  backed  for  redemption  by  the  United  States,  why  not  abandon  the  inter- 
mediate subterfuge  and  let  the  United  States  issue  its  legal  tender  on  its  own 
backing  at  once  in  place  of  the  bonds  ?  The  other  system  has  a  strong 
appearance  of  an  intention  to  adopt  a  method  whereby  the  United  States  shall 
under  a  cloak  of  disguise  pay  unearned  money  to  a  class  of  persons. 

FEEE  COINAGE  OF  SILVEE 

is  open  to  much  the  same  criticism. 

Last  year  the  silver  product  of  the  United  States  was  worth  in  commerce 
846,000,000,  but  if  coined  it  was  worth  864,000,000,  a  profit  of  818,000,000.  The 
free  coinage  of  silver. would  seem  to  make  a  present  of  818,000,000  per  year  to  the 
owners  of  mines.  If  the  whole  output  of  silver  were  bought  by  the  people  (the 
United  States)  at  its  commercial  value  and  stored,  and  certificates  issued  for  its 
purchase,  the  profit  or  loss  would  be  for  the  benefit  of  the  whole  people. 


17 

FOREIGN  SILVER. 

The  purchase  of  foreign  silver  cannot  increase  our  circulating  medium. 
The  money  or  certificates  we  issue  are  changed  into  coin  and  sent  abroad  to 
pay  for  the  silver. 

This  is  really  increasing  foreign  circulating  medium  at  the  cost  of  the  United 
States. 

KILLING  OUE  PROSPERITY. 

"Why  do  not  those  who  have  for  years  declaimed  against  too  much  money  sug- 
gest a  relief  measure  for  the  situation  as  shown  by  the  past  twenty  years. 

Every  time  our  country  becomes  prosperous,  and  laborers  are  employed  all  over 
the  nation,  and  our  industries  are  active,  and  men  contentedly  at  work,  we  reach 
an  advance  prosperity  beyond  our  circulating  medium.  Then  commences  a  finan- 
cial rigor,  resulting  in  the  death  of  thousands  of  prosperous  industries,  and  throw- 
ing out  of  employment  tens  of  thousands  of  laborers. 

Then  arises  a  cry  from  would-be  financiers  that  the  business  of  the  country  is 
overdone. 

It  cannot  be  overdone  so  long  as  our  laboring  classes  are  employed,  and 
clothed  and  fed  thereby.  Extensive  articles  are  published  to  show  the  building 
of  railroads,  city  business  blocks,  etc.,  etc.,  is  overdoing  the  business  of  the 
country.  What  would  such  writers  want  ?  Did  not  all  that  work  furnish  labor, 
food,  clothing  to  hundreds  of  thousands  ?  What  would  such  persons  have  done 
without  that  employment  ?  The  remedy  is  not  to  kill  off  the  business  but  to 
sustain  and  increase  it.  The  point  at  which  business  begins  to  break  down  is 
when  the  employers  cannot  collect  payment  for  material  and  produce ;  when  the 
owners  of  property  cannot  get  money  simply  because  the  money  is  too  scarce  to 
be  had,  not  enougli  to  go  around. 

The  remedy  is  for  the  nation  to  periodically  increase  the  circulation  to  keep 
pace  with  the  prosperity  of  the  country,  and  not  kill  the  prosperity  to  await  some 
slow  process  of  growth  of  circulating  medium. 

The  owners  of  property  cannot  pay  day  labor  in  portions  of  property.  But  if 
the  owner  of  property  can  borrow  money  on  it  he  can  daily  pay. 

The  insufficiency  of  currency  to  represent  small  values  prevents  the  employ- 
ment of  laborers.  What  there  is  of  the  money  accumulates  most  in  cities.  Hence, 
to  the  cities  go  vast  crowds  of  laborers  to  find  jobs  of  work.  When  there  is  money 
in  the  rural  districts,  the  laborers  willingly  go  there.  A  large  volume  of  circulat- 
ing medium  would  therefore  supply  rural  districts  with  money,  and  call  back  again 
to  country  life  from  overcrowded  cities. 

A  PROPOSED  BILL. 

The  accompanying  bill  is  suggested  as  a  comprehensive  system  to  cover  our 
whole  finances  permanently.  The  wisdom  of  Congress  will,  of  course,  add  improve- 
ments. 

The  Bill  is  drawn  so  as  to  utilize  the  elements  found  by  long  usage  to  have  been 
best  in  the  systems  of  the  United  States,  England,  Scotland,  France  and  Germany, 
at  the  same  time  providing  against  the  dangers  that  damaged  the  finances  of  past 
schemes. 

There  are  also  new  elements  introduced  to  meet  peculiar  demands  and  con- 
ditions existing  iu  this  country.  The  words  in  italic  show  wherein  the  Bill  differs 
from  the  present  law  of  the  United  States,  taking  the  Act  of  June  3,  1864,  as  sub- 
stantially embracing  the  present  system. 


18 

FINANCES  versus  POLITICS. 

The  matter  is  now  before  Congress,  and  has  the  attention  of  the  country. 
Will  Congress  content  itself  with  some  more  legislative  patchwork,  to  temporarily 
tide  over  the  present,  soon  to  be  followed  by  another  financial  rigor  ? 

If  a  complete,  full,  comprehensive  system,  based  on  safe  constitutional 
restrictions,  executed  by  a  statesmanlike  law,  is  proposed  in  Congress  by  either 
political  party,  will  the  other  dare  oppose  it  ?  If  neither  party  is  competent  to 
handle  the  matter,  or  will  not,  then  the  people  will  receive  no  campaign  pledges 
on  the  subject  from  them.  In  that  case  what  will  be  the  vantage  to  the  Farmers' 
Alliance,  or  a  third  party  ? 

The  people  believe  that  Government,  and  politics  and  parties  are  means  to  benefit 
the  people  and  their  property. 

Do  not  the  people  now  need  ample  legislation  to  put  the  money  system  in  order 
so  as  to  stop  the  present  widespread  ruin,  and  to  give  employment  to  the  idle 
multitudes  asking  for  work,  and  to  build  up  and  develop  the  vast  industries  and 
resources  of  the  nation  ? 

This  financial  question  is  the  great  question  of  the  hour.  All  past  attempts  at 
solution  have  been  on  the  theory  of  gold  alone,  or  an  effort  to  keep  the  supply  of 
money  as  short  as  possible.  This  scheme  has  worked  disastrously,  ftarfully  so, 
and  has  to  be  supplemented  by  the  use  of  personal  notes,  checks,  drafts,  "panic 
certificates,"  etc.,  all  non-legal  tender,  and  dangerous  substitutes  for  a  national 
legal  tender  note  backed  by  the  wealth  of  62,000,000  people,  having  over  $71,000,000,000 
of  wealth. 

Legislative  financial  relief  puts  money  indirectly  in  the  hands  of  every  voter, 
and  revives  the  dying  industries  and  development  of  the  nation. 

Will  any  financial  legislation  that  benefits  a  class  of  citizens  or  a  part'cular 
section  of  the  nation  be  accepted  by  the  masses  as  satisfactory  ? 

STOKM  SIGNALS. 

A  history  of  the  financial  storm  would  occupy  too  much  space.  For  those  who 
care  to  trace  its  growth  we  herewith  attach  a  cuirent  daily  list  of  "newspaper 
head-lines  "  from  August  to  December  last.  They  give  a  most  concise  idea  of  the 
situation: 

"  Wall  Street  wants  more  money."  "  The  bottom  fell  out."  "  Still  no  bot- 
tom." "  Another  day  of  surprises  on  Wall  Street."  "  No  cause  for  a'arm,  says  a 
prominent  N.  Y.  banker."  "The  Treasury  not  inclined  to  help."  "Banks  in 
difficulty."  "  Jay  Gould  says  the  worst  is  over."  "  Some  of  the  strongest  banks 
unable  to  settle."  "Saved  from  ruin;  the  Rothschilds  and  Bank  of  England  come 
to  the  rescue."  "The  Secretary  pours  out  nearly  $70,000,000  to  relieve  the  situa- 
tion." "N.  Y.  Banks  issue  Clearing  House  Certificates  to  relieve  the  financial 
strain. "  "  Boston  Clearing  House  issues  Certificates;  amount  not  limited. "  "  Phila- 
delphia Clearing  House  issues  Certificates  to  relieve  the  stringency;  amount  not 
limited."  "  The  Treasury  turns  loose  $163, 000, 000  in  October  to  relieve  the  strain." 
"  Prominent  N.  Y.  Bankers  say  the  strain  is  over  and  plenty  of  money."  "To- 
day the  streets  were  full  of  rumors  that  more  Clearing  House  Certificates  would 
be  issued."  "$900,000  more  Clearing  House  Certificates  were  issued."  "The 
usual  announcement  was  made  that  the  banks  had  no  immediate  use  for  the  certifi- 
cates; that  the  banks  simply  took  them  out  to  help  the  moral  sentiment."  "N.  Y. 
Banks  lose  money,  and  prices  go  to  the  bad."  "N.  Y.  Banks  take  out  $250,000 


19 

more  Clearing  House  Certificates."  "The  Banks  are  $2,429,650  below  the  reserve 
limit."  "  The  West  and  the  South  are  calling  for  more  funds."  "  Money  loaned 
on  Wall  Street  at  200  per  cent,  over  legal  rates."  "  Secretary  Windom  talks  on 
the  situation."  "  Boston  Clearing  House  issues  more  Certificates."  "  Gold  ordered 
from  London."  "N.  Y.  Bankers  say  the  worst  is  over,  and  that  after  to-morrow 
the  man  who  will  not  be  satisfied  with  the  situation  is  very  unreasonable."  "  The 
Secretary  buys  $5,000,0004  percent."  "Three  N.  Y.  Banks  to-day  took  out 
$1,000,000  Clearing  House  Certificates."  "Total  issue,  $15,000,000."  "The 
financial  stringency."  "The  cure  to  be  found  in  wise  legislation."  "Bonded 
periods  for  imports  may  be  extended. "  "Coal  mines  shut  down,  and  thousands 
of  men  out  of  employment."  "  The  financial  pinch." 

"Paris,  Berlin  and  Amsterdam  should  come  to  the  rescue  and  send  gold  to 
New  lrork." 

"  Good  New  Yrork  authority  says  the  panic  is  over." 

"More  Clearing  House  Certificates  taken  out  for  the  relief  of  the  market." 
"Congress  to  come  to  the  relief  of  the  money  market."  "President  Harrison 
will  send  a  message  to  Congress  on  Monday  urging  the  issue  of  more  money." 
"Uneasiness  in  New  Yrork  circles."  "  Up  the  spout.  Steady  increase  of  business 
failures."  "More  hopeful."  "No  doubt  a  steady  improvement  in  finances." 
"  The  financial  cyclone  continues  to  interrupt  business."  "  Windom's  conference 
with  New  York  bankers."  "Public  confidence  restored  by  the  prompt  action  of 
the  Administration."  ''Bankers  recover  from  their  fright."  "No  cause  for 
uneasiness."  "  Wide  sto-k  fluctuations. "  "Firms  forced  to  suspend;"  "Several 
more  bank  failures."  "The  financial  strain  keeps  up."  "Germany  calls  more 
gold  from  London."  "The  Bank  of  England  loses  more  gold."  "Over  $200,- 
000,000  have  been  recently  paid  out  by  the  Treasury  to  relieve  the  market,  and  the 
strangest  fact  is,  scarcely  a  trace  of  its  effect  is  left."  "  Secretary  Windom  says  the 
strange  feature  is  that  the  stringency  is  not  confined  to  New  York,  but  exists  all 
over  the  country."  "The  shrinkage  in  stocks  and  bonds  in  N.  Y.  Stock  Exchange 
since  last  June  is  over  $300,000,000. " 

December  24,  1890.  London,  Stat.  — "The  French  funding  loan  for  about 
£36,000,000  is  to  come  out  next  month.  Their  balances  will  be  called  in  from  Lon- 
don by  the  French  banks."  "  Holland  will  call  also  for  a  large  amount  of  gold." 
"Germany  and  Kussia  will  probably  call  home  large  sums  of  gold."  "Portugal 
and  Austro-Hungary  are  seeking  a  large  supply  of  gold  for  Government  use." 
"  South  America,  Egypt  and  Africa  are  using  unusually  large  quantities  of  gold." 

DANGER  AHEAD ! 

The  Czar  orders  that  the  killing  of  Jews  in  Russia  shall  cease  for  three  years 
for  financial  reasons. 

London,  January  14.  The  Times'  correspondent  says:  "  TJie  Russian  Minister 
of  Finance,  representing  that  it  was  inexpedient  to  quarrel  with  the  Jews  because  such 
a  course  would  offend  Jewish  bankers,  the  Czar  ordered  the  application  of  the  anti- 

litic  laws  to  be  suspended  for  three  years." 

In  the  Baring  Bros,  trouble,  Lord  Salisbury  refused  to  allow  the  Bank  of 
igland  to  furnish  aid.  Thereupon  the  President  of  the  Bank  said  to  him: 
My  Lord,  I  am  instructed  to  tell  you,  in.  case  you  refuse,  that  unless  the  Government 
comes  to  the  rescue,  there  is  hardly  a  bank  in  the  United  Kingdom  that  can  be  relied 
upon  to  meet  the  demand  of  its  creditors  TWENTY-FOUR  HOURS  AFTER  THE  DISASTER 


20 

WE  APPREHEND."  Lord  Salisbury  jumped  from  his  chair  as  if  shot,  and  ordered 
the  relief. 

The  Bank  of  England  is  indebted  over  $100,000,000  to-day  borrowed  money  for 
the  panic. 

The  above  are  only  a  few  of  many  samples.  If  our  legislators  neglect  the  signs 
of  the  times  and  neglect  action,  a  fearful  financial  penalty  will  be  paid  for  it. 

In  the  next  panic  and  financial  crash  the  nations  will  not  be  able  to  extend  aid 
to  each  other.  The  elements  of  national  panic  are  too  widespread,  and  each  one 
will  reserve  its  funds  for  self-preservation. 


GOLD   STANDARD   OF   VALUE. 

There  can  be  only  one  standard  or  unit  of  value,  from  which  other  values,  by 
comparison,  will  be  computed  for  business.  Governments  can  use  anything  as 
such  standard  —  copper,  lead,  or  grain — but  it  is  best  to  use  that  which  is  most 
generally  accepted,  and  which  fluctuates  least.  This  has  been  found  by  ages  of 
experience  to  be  gold. 

While  gold  should  be  the  standard  unit  of  value,  it  cannot  possibly  furnish  the 
needed  volume  of  circulating  medium  for  the  nations.  The  circulating  medium 
must  be  largely  representative  of  the  gold  standard.  Checks,  drafts,  certificates, 
legal  tenders,  etc.,  are  representative  of  the  standard  value,  while  copper,  nickel, 
and  silver  are  partly  representative  and  partly  intrinsic  in  value. 

The  difference  between  the  commerical  value  of  copper,  nickel  and  silver  and 
the  gold  standard  represents  the  faith  and  ability  of  the  nation  to  pay  the  differ- 
ence. 

While  the  legal  tender  represents  the  faith  and  ability  of  the  nation  to  pay 
the  full  standard  value,  checks,  drafts,  etc.,  only  represent  the  faith  and  ability  of 
the  drawer  to  pay  the  standard  value.  Great  confusion  and  apparent  differences 
exists  in  the  debates,  literature,  and  resolutions  of  people,  owing  to  the  ambiguous 
use  of  the  words  representing  these  ideas. 

The  recent  resolutions  at  Faneuil  Hall,  and  the  speeches  there  made,  embrace, 
unfortunately,  this  error.  Quite  a  stress  was  placed  upon  the  honest  gold  dollar. 
That  the  laboring  man  should  be  paid  in  gold  dollars,  etc.  Yet,  strange  to  say, 
none  of  the  laborers  are  paid  in  honest  gold  dollars.  They  are  all  paid  in  paper 
money,  representative  of  a  gold  standard.  All  the  banks  in  this  Eastern  country 
pay  in  paper  representative  money,  and  not  in  honest  gold  dollars.  All  the  banks 
in  the  United  States  have  only  about  two  cents  on  the  dollar  in  gold  to  pay  depos- 
itors. 

But  they  say  you  can  always  get  gold  for  the  paper  dollar.  Theoretically  you 
can,  practically  you  cannot,  for  there  are  not  as  many  gold  dollars  with  the  gov- 
ernment and  banks  combined  as  there  are  paper  dollars  in  circulation.  Therefore 
the  honest  dollar  is  any  representative  dollar  of  the  gold  standard  or  unit  of  value. 
The  whole  apparent  controversy  on  the  financial  question  of  the  United  States 
may  safely  be  asserted  to  harmonize  on  this  proposition.  One  gold  standard  or 
unit  of  value,  with  copper,  nickel,  silver,  and  paper  issued  by  the  United  States  rep- 
resentative of  the  gold  standard,  with  the  faith  and  ability  of  the  nation  pledged  to 
pay  the  difference  for  the  common  good  of  the  people  when  required,  and  a  sufficient 
volume  of  it  to  fully  meet  the  wants  of  the  people. 

The  coinage  of  silver  on  the  above  basis  would  probably  meet  the  entire 
approval  of  the  nation,  the  government  buying  the  silver  at  its  market  value,  pay- 
ing therefor  in  legal  tenders,  and  holding  it  as  an  asset.  Of  course,  the  only  true 
circulating  medium  is  the  paper  legal  tender  representative  of  the  gold  standard, 
with  the  faith  and  wealth  of  the  nation  back  of  it.  Cannot  our  Eastern  financiers 
hasten  the  return  of  financial  prosperity  by  bringing  their  resolutions  to  clearly 
recognize  the  differences  above  indicated? 

BOSTON,  1891. 


21 


The  parti  in  italics  show  where  this  Bill  differs  from  present  Act  of  June  3,  1864. 

A    BILL 

TO  PROVIDE  A  NATIONAL  CIRCULATING  MEDIUM,  AND  TO  PROVIDE 
FOR  THE  CIRCULATION  THEREOF. 


Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the  United  States  of 
America  in  Congress  assembled:  That  there  shall  be  established  in  the  Treasury  De- 
partment a  separate  bureau  which  shall  be  charged  with  the  execution  of  this  and  all 
other  laws  that  may  be  passed  by  Congress  respecting  the  issue  and  circulation  of 
a  national  circulating  medium.  The  chief  officer  of  said  bureau  shall  be  denomi- 
nated the  Comptroller  of  Finance,  and  shall  be  under  the  general  direction  of  the 
Secretary  of  the  Treasury.  He  shall  be  appointed  by  the  President  of  the  United 
States,  with  the  approval  of  the  Secretary  of  the  Treasury,  by  and  with  the  consent 
of  Congress,  and  shall  hold  his  office  for  the  term  of  ten  years  unless  sooner 
removed  by  the  President  with  the  consent  of  Congress.  He  shall  receive  an 
annual  salary  of  e'ujht  thousand  dollars;  he  shall  have  a  competent  deputy 
appointed  by  the  Secretary,  whose  salary  shall  be  two  thousand  five  hundred  dol- 
lars per  year,  who  shall  possess  the  power  and  perform  the  duties  of  the  Comp- 
troller during  a  vacancy  in  said  office  or  during  the  absence  or  inability  of  the 
Comptroller.  The  Comptroller  shall  employ  from  time  to  time  the  necessary 
clerks  to  discharge  such  duties  as  he  shall  direct.  Such  clerks  shall  be  classified 
by  the  Comptroller,  subject  to  the  direction  of  the  Secretary  of  the  Treasury,  which 
clerks  shall  be  classified  in  the  manner  now  prescribed  by  law.  Within  fifteen 
days  after  notice  of  his  appointment  he  shall  take  and  subscribe  the  oath  of  office 
prescribed  by  the  Constitution  and  the  laws  of  the  United  States,  and  shall  give  to  the 
United  States  a  bond  in  the  penal  sum  of  one  hundred  thousand  dollars,  with  not 
less  than  four  responsible  sureties,  to  be  approved  by  the  Secretary  of  the  Treas- 
ury, conditional  for  the  faithful  discharge  of  the  duties  of  his  office.  The  Deputy 
Comptroller  shall  also  take  said  oath  of  office,  and  give  a  similar  bond  in  the  sum 
of  fifty  thousand  dollars.  The  Comptroller  or  Deputy  Comptroller  shall  not,  either 
directly  or  indirectly,  be  interested  in  any  association  doing  a  banking  business 
under  this  act. 

SEC.  2.  And  be  it  further  enacted  : 

That  the  Comptroller  of  Finance,  with  the  approval  of  the  Secretary  of  the 
Treasury,  shall  devise  a  seal,  witli  suitable  inscriptions,  for  his  office,  a  descrip- 
tion of  which,  with  the  certificate  of  approval  by  the  Secretary  of  the  Treasury, 
shall  be  filed  in  the  office  of  the  Secretary  of  State,  with  an  impression  thereof, 
which  shall  thereupon  become  the  seal  of  office  of  the  Comptroller  of  Finance, 
and  the  same  may  be  renewed  when  necessary.  Every  document  executed  by  the 
Comptroller,  in  pursuance  of  any  authority  conferred  on  him  by  law,  and  sealed 
with  his  seal  of  office,  shall  be  received  in  evidence  in  all  places  and  courts  what- 
soever; and  all  copies  of  papers  in  the  office  of  the  Comptroller,  certified  by  him 


22 

to  be  correct  copies  of  the  originals  in  his  office,  shall  in  all  cases  be  evidence 
equally  and  in  like  manner  as  the  originals.  An  impression  of  such  seal  directly 
on  the  paper  shall  be  as  valid  as  if  made  on  wax  or  wafer. 

SEC.  3.  And  be  it  further  enacted: 

That  there  shall  be  assigned  to  the  Comptroller  of  Finance,  by  the  Secretary  of 
the  Treasury,  suitable  rooms  in  the  Treasury  Building  for  conducting  the  business 
of  the  Bureau  of  Finance,  in  which  shall  be  safe  and  secure  fire-proof  and  burglar- , 
proof  vaults  in  which  it  shall  be  the  duty  of  the  Comptroller  to  deposit  and  safely 
keep  all  plates  not  necessarily  in  the  possession  of  engravers  and  printers,  and 
other  valuable  things  belonging  to  his  department;  and  the  Comptroller  shall  from 
time  to  time  furnish  the  necessary  furniture,  stationery,  fuel,  light  and  other 
proper  conveniences  for  the  transaction  of  said  business. 

SEC.  4.  And  be  it  further  enacted: 

That  the  Comptroller  of  Finance,  under  the  direction  of  the  Secretary  of  the 
Treasury,  is  hereby  authorized  and  directed  to  issue  a  circulating  medium  in  the 
name  of  the  United  States  of  America  to  the  amount  of  $20,  in  addition  to  gold 
and  silver  coin,  per  capita  of  the  population  of  the  census  of  1890.  Upon  ascer- 
taining each  following  census  the  issues  shall  be  increased  to  $20  per  capita. 
In  order  to  furnish  suitable  notes  for  circulation  the  Comptroller  of  Finance  is- 
hereby  authorized  and  required,  under  the  direction  of  the  Secretary  of  the 
Treasury,  to  cause  plates  and  dies  to  be  engraved,  in  the  best  manner  to  guard 
against  counterfeiting  and  fraudulent  alterations,  and  to  have  printed  therefrom, 
on  paper  or  similar  material  best  adapted  therefor,  and  numbered,  the  quantity  of 
circulating  notes,  of  the  denominations  of  one  dollar,  two  dollars,  five  dollars,  ten 
dollars,  twenty  dollars,  fifty  dollars,  one  hundred  dollars  and  five  hundred  dollars, 
as  may  be  required  to  supply  the  issue  herein  called  for*  The  number  of  each, 
denomination  in  use  shall  be  such  that  the  needs  of  the  people  shall  be  best  subserved  thereby. 
The  notes  of  each  denomination  shall  be  consecutively  numbered  from  No.  1  up.  That  a  dupli- 
cate of  each  denomination  and  from  each  successive  plate  used  shall  be  perforated  with  the  word 
"duplicate,"  and  carefully  preserved  for  use  in  the  identification  of  the  originals,  and  for  the 
detection  of  counterfeits,  by  comparison  therewith.  Said  notes  shall  express  on  their  face  that 
they  are  issued  by  the  Government  of  the  United  States  of  America  as  the  circulating  medium  of 
the  people  of  the  United  States.  They  shall  have  the  written  or  engraved  signatures  of  the 
Secretary  of  the  Treasury,  and  of  the  Comptroller  of  Finance,  and  the  imprint  of  the  seal  of  the 
Treasury,  and  shall  bear  such  other  statements  and  devices  as  the  Secretary  of  the  Treasury 
shall  direct,  and  shall  contain  a  statement  that  ' '  This  note  must  be  surrendered  to  the  Comp- 
"  trotter  of  Finance  in  exchange  for  a  new  note  of  similar  denomination  during  the  year  "  (stating 
the  year  for  retiring  the  same).  Said  notes,  and  gold  and  silver  coin  of  the  United  States,  shall 
be  received  at  par,  inpayment  of  all  obligations  within  the  jurisdiction  of  the  United  States  for 
the  payment  of  money.  The  monetary  use  of  gold  and  silver  coin  of  the  United  States  under 
existing  laws  is  not  hereby  interfered  with,  and  said  notes,  gold  and  silver  coin  shall  be  exchange- 
able at  their  par  value,  in  such  manner  as  shall  best  subserve  the  interests  of  the  people. 

SEC.  5.  And  be  it  further  enacted  : 

That  it  shall  be  the  duty  of  the  Comptroller  of  Finance  to  receive  worn  out  and 
mutilated  circulating  notes  issued  hereunder,  and  with  the  Secretary  of  the  Treasury 
the  Comptroller  of  Finance  shall  compare  said  notes  with  the  duplicates  thereof  on 
file,  and  when  satisfied  that  the  same  are  the  originals  issued  under  this  act,  they 
shall  be  destroyed  by  being  burned  to  ashes  in  the  presence  of  the  Secretary  of  the 
Treasury  and  the  Comptroller  of  Finance  and  such  other  person  as  the  President 
shall  designate.  A  permanent  book  of  record  of  the  destruction  of  such  notes,  with 


sufficient  descriptions  thereof,  shall  be  kept  by  the  Comptroller  of  Finance  and  pub- 
lished in  the  Bulletin  of  Finance.  After  said  destructions  of  said  notes,  new  notes 
of  the  same  denominations  and  number  shall  be  issued  to  the  owners  of  the  destroyed 
notes,  of  which  duplicates  shall  be  kept  as  hereinbefore  provided.  Such  new  notes 
shall  be  marked  second  series  or  third  series  as  the  case  may  be. 

SEC.  6.  And  be  it  further  enacted  : 

That  in  the  year  following  each  second  census  beginning  with  the  census  of  1910,  the  entire 
issue  of  circulating  notes  shall  be  retired  and  destroyed  as  provided  in  section  5  herein.  And 
under  the  provisions  of  this  act  a  new  issue  shall  be  made  from  new  dies  and  plates  and  with 
new  designs,  and  shall  be  substituted  for  the  retired  notes,  and  during  the  year  for  retiring  said 
notes  each  banking  institution  doing  business  hereunder,  shall  during  the  months  of  January, 
February,  March  and  April  forward  to  the  Comptroller  of  Finance  25  per  cent,  each  month  of 
said  notes  in  its  possession,  and  in  exchange  therefor  the  Comptroller  of  Finance  shall  issue  notes 
of  the  same  denomination.  During  the  remaining  months  of  the  year  each  of  said  banking  insti- 
tutions shall  monthly  forward  all  of  the  old  issue  of  notes  it  may  have  or  receive  to  the  Comp- 
troller of  Finance  for  destruction  and  exchange.  During  said  remaining  months  of  said  year 
for  retiring  said  old  issue  any  person  or  corporation  may  forward  notes  of  the  old  issue  for 
destruction  and  exchange  to  the  Comptroller  of  Finance.  After  the  expiration  of  the  said  year  for 
the  retiring  said  old  issue  of  notes,  the  said  old  issue  shall  cease  to  be  lawful  money  of  the  United 
Stales,  and  shall  only  be  received  by  the  Comptroller  of  Finance  for  desti-uction  and  exchange, 
nml  tiJuill  be  so  received  until  the  outstanding  old  issue  is  entirely  retired  and  destroyed. 
The  dies  and  plates  used  in  producing  the  old  issue  of  notes  shall  be  destroyed  by 
fusing  in  fire  in  January  of  each  year  retiring,  in  the  presence  of  the  Secretary  of 
the  Treasury,  the  Comptroller  of  Finance,  and  some  person  appointed  by  the 
President.  A  record  of  the  destruction  of  said  plates  shall  be  kept  in  the  office  of 
the  Comptroller  of  Finance. 

SEC.  7.  And  be  it  further  enacted  : 

That  for  the  purpose  of  putting  said  notes  in  circulation  the  Comptroller  of  Finance  shall  be 
authorized  to  redeem  all  outstanding  notes  or  currency  of  the  United  States,  and  to  buy  legally 
issued  bonds  of  the  states,  counties,  incorporated  cities  of  over  3,000  inhabitants,  and  public 
school  districts,  said  bonds  to  be  issued  by  said  states,  counties,  cities  and  districts,  for  a  valua- 
tion not  to  exceed  five  per  cent,  of  the  average  assessed  value  of  the  real  estate  in  said  state, 
county,  city  or  district,  for  the  five  years  preceding  the  issuance  of  said  bonds,  deducting  from 
the  said  issue  of  bonds  the  par  value  of  any  other  outstanding  bonds  issued  by  said  state,  county ', 
city  or  district.  Said  bonds  shall  be  a  lien  on  all  real  estate  in  said  state,  county,  city  or  district, 
•nnl  shall  bear  interest  at  the  rate  of  two  per  cent,  per  year,  and  shall  not  run  to  exceed  twenty 
years.  The  interest  shall  be  payable  annually  to  the  Comptroller  of  Finance  at  Washington,  and 
a  sinking  fund  shall  be  provided  in  each  case  sufficient  to  liquidate  said  bonds  at  or  before 
maturity.  The  pul>!i<:  issuance  of  such  bonds,  their  delivery  to  the  Comptroller  of  Finance,  and 
the  receipt  of  the  circulating  notes  therefor  shall  be  deemed  conclusive  evidence  of  the  legal  issu- 
ance and  validity  of  said  bonds,  and  thereafter  no  defense  shall  be  set  up  to  the  payment  of 
principal  or  interest,  or  to  the  levying  and  collecting  of  taxes  therefor.  All  objections  or  defense 
to  the  issue  of  said  bonds  must  be  made  by  the  parties  interested  prior  to  the  delivery  thereof  to 
the  Comptroller  of  Finance,  otherwise  they  are  forever  waived  and  barred  as  a  defense.  Said 
bonds  may  be  sold  by  the  Comptroller,  and  such  bonds  or  any  United  States  bonds  may  be  depos- 
it'.-'l  '/(•  par  as  reserve  security  by  banks  in  the  same  manner  as  provided  for  real  estate  herein. 

Jf  said  state,  county,  city  or  district  shall  fail  or  neglect  at  any  time  to  levy  and  collect  a 
sufficient  tax  to  meet  the  obligations  of  said  bonds,  there  shall  be  immediately  due  and  payable  to 
the  Comptroller  of  Finance  a  tax  on  the  real  and  personal  property  in  said  state,  county,  city  or 
district  in  default  on  its  last  assessment  roll  sufficient  to  meet  said  payments  and  costs  of  col- 
lecting the  same;  and  the  same  shall  be  collected-  by  any  person  or  persons  appointed  therefor  by 


24 

the  Comptroller  of  Finance,  who  shall  have  power  where  said  tax  is  not  paid  within  thirty  days 
after  it  is  levied  to  collect  the  same  by  seizure  and  sale  upon  warrant  issued  by  any  judge  ex  parte 
of  any  court  of  original  jurisdiction,  state  or  national,  having  jurisdiction  of  the  property.  The 
United  States  may  become  the  purchaser  of  such  property.  Redemption  may  be  made  within  one 
year  after  sale  by  paying  the  amount  due  on  the  sale  and  interest  thereon  at  ten  per  cent. 

SEC.  8.  And  be  it  further  enacted: 

That  associations  for  carrying  on  the  business  of  banking  may  be  formed  by 
any  number  of  persons,  not  less  in  any  case  than  five,  who  shall  enter  into  articles 
of  association,  which  shall  specify  in  general  terms  the  proposed  name  of  the  asso- 
ciation, the  object  for  which  the  association  is  formed,  and  the  proposed  capital 
stock;  and  may  contain  any  other  provisions  not  inconsistent  with  the  provisions 
of  this  act,  which  the  association  may  see  fit  to  adopt  for  the  regulation  of  the 
business  of  the  association  and  the  conduct  of  its  affairs,  which  said  articles  shall 
be  signed  by  the  persons  uniting  to  form  the  association,  and  a  copy  of  them 
forwarded  to  the  Comptroller  of  Finance,  to  be  filed  and  preserved  in  his  office. 
Attached  to  said  articles  of  association  shall  be  a  schedule  of  the  bonds  or  real  estate 
offered  and  known  as  "  the  reserve  security  "  as  herein  provided  for,  which  schedule  shall  accu- 
rately describe  said  bonds,  and  real  estate  and  the  improvements  thereon,  stating  in  whom  the  title 
is  vested  in  fee  simple  absolute,  free  of  all  incumbrances  or  liens,  and  giving  the  yearly  assessed 
value  thereof  for  each  separate  year  for  stale  and  county  purposes  for  the  Jive  preceding  years, 
which  schedule  shall  be  certified  to  as  correct  by  the  proper  keeper  of  the  records  of  title  of  said 
property.  Upon  receipt  of  said  articles  and  schedule,  the  Comptroller  of  Finance 
shall  proceed  in  whatever  manner  he  deems  best  to  verify  the  facts  set  out  in  said 
schedule;  and  when  satisfied  that  the  average  assessed  value  for  said  five  years  next 
preceding  is  not  in  excess  of  half  of  the  actual  value  of  said  real  estate,  and  that 
the  schedule  is  otherwise  correct  as  to  its  statements,  he  shall  notify  said  persons 
of  that  fact  and  of  the  name  approved  by  him  for  the  association. 

SEC.  9.  And  be  it  further  enacted: 

That  the  persons  uniting  to  form  such  an  association  shall  make  a  certificate  of 
organization,  which  shall  specify: 

First. — The  name  assumed  by  the  association. 

Second. — The  place  where  its  operations  of  discount  and  deposit  are  to  be 
carried  on,  designating  the  state,  territory  or  district,  and  also  the  particular 
county  and  city,  town  or  village. 

Third.  — Its  capital  stock,  and  the  number  of  shares  into  which  it  shall  be 
divided. 

Fourth. — The  names  and  places  of  residence  of  the  shareholders,  and  the 
number  of  shares  held  by  each. 

Fifth. — An  accurate  copy  of  the  schedule  of  bonds  or  real  estate  attached 
to  the  articles  of  association  provided  for  in  section  8. 

Sixth.  —A  declaration  that  said  certificate  is  made  to  enable  such  persons 
to  avail  themselves  of  the  advantages  of  this  act,  and  that  said  real  estate  is 
for  security  as  required  in  this  act. 

The  said  certificate  shall  be  duly  signed  and  acknowledged  by  each  of  said  per- 
sons, in  the  manner  required  by  the  law  of  the  place  for  acknowledging  convey- 
veyances  of  real  estate,  to  entitle  them  to  be  recorded.  When  duly  certified 


therefor  said  certificate  shall  be  recorded  in  the  proper  book  of  record  of  the  county  or  district  in 
which  the  real  estate  is  situated ;  thereafter  no  lien  or  claim  shall  attach  to  any  of  said  real 
estate,  except  such  as  shall  be  wholly  subordinate  to  the  prior  claim  under  said  certificate  against 
said  real  estate  for  the  purposes  of  this  act.  When  duly  recorded  the  said  certificate 
shall  be  transmitted  to  the  Comptroller  of  Finance,  who  shall  record  and  carefully 
preserve  the  same  in  his  office.  Copies  of  said  certificate,  duly  certified  by  the 
Comptroller  of  Finance  and  authenticated  by  his  seal  of  office,  shall  be  legal  and 
sufficient  evidence  in  all  courts  and  places  within  the  jurisdiction  of  the  Govern- 
ment of  the  United  States  of  the  existence  of  said  association  and  of  every  other 
matter  that  could  be  proved  by  the  production  of  the  original  certificate. 

SEC.  10.  And  be  it  further  enacted : 

That  no  association  shall  be  organized  hereunder  with  a  "reserve  security"  greater  than  one 
million  dollars,  or  with  a  less  "  reserve  security  "  than  tucenty-Jive  thousand  dollars,  nor  with  a 
capital  stock  of  less  than  fifty  thousand  dollars. 

SEC.  11.  And  be  it  further  enacted: 

That  whenever  a  certificate  of  organization  has  been  received  and  filed  by  the 
Comptroller  of  Finance,  and  is  found  by  him  to  fully  comply  with  the  require- 
ments of  this  act,  the  Comptroller  of  Finance  shall  proceed  to  investigate  in  the 
manner  deemed  best  the  personal  standing,  financial  condition  and  record  of  the 
persons  seeking  to  form  the  association,  also  the  object  of  the  association,  the  loca- 
tion and  value,  present  and  prospective,  of  the  real  estate  described  in  said  certi- 
ficate of  organization,  and  any  other  facts  that  may  aid  him  in  determining  the 
desirability  of  such  an  association  and  the  probable  safety  of  its  business  affairs 
and  management.  The  Comptroller  of  Finance  may  use  such  special  means  as  he 
deems  best  to  safely  ascertain  the  facts  above  referred  to.  When  it  shall  appear 
to  the  satisfaction  of  the  Comptroller  of  Finance  that  the  association  is  lawfully 
entitled  to  commence  the  business  of  banking  with  safety  to  the  government  and 
to  the  people,  he  shall  issue  to  such  association  a  certificate  under  his  hand  and 
official  seal  that  such  association  has  complied  with  all  the  provisions  of  this  act 
required  to  be  complied  with,  and  that  such  association  is  authorized  to  commence 
the  business  of  banking,  designating  the  place  of  business,  fully  naming  the 
directors  and  officers  thereof  for  the  first  year  and  its  capital  stock.  The  said  cer- 
tificate shall  be  published  in  such  local  newspaper  for  sixty  days,  as  the  Comp- 
troller of  Finance  shall  designate.  From  the  date  of  said  certificate  said  associa- 
tion shall  be  deemed  a  body  corporate  to  transact  the  business  of  banking 
hereunder,  with  the  usual  rights,  powers  and  duties  of  banking  corporations,  and 
shall  exist  for  the  period  of  twenty  years.  An  impress  of  its  corporate  seal  shall 
be  filed  with  the  Comptroller  of  Finance  and  with  the  Secretary  of  the  Treasury. 

SEC.  12.  And  be  it  further  enacted: 

That  thereafter,  upon  the  demand  of  the  said  association,  the  Comptroller  of  Finance  shall 
issue  to  said  association  a  warrant  on  the -Treasury  of  the  United  States,  for  circulating  notes  of 
tin  Government  to  the  amount  of  the  said  assessed  value  of  said  real  estate,  or  the  par  value  of 
said  bonds  deposited  by  said  bank,  or  for  any  part  thereof,  as  demanded  from  time  to  time, 
which  warrants,  upon  presentment  duly  endorsed,  shall  be  paid  out  of  the  Treasury  in  the  notes 
issued  hereunder.  Said  sum  or  any  part  thereof  may,  on  the  first  of  any  quarter  of  the  year,  be 
returned  to  the  Treasury. 

SEC.  13.  And  bo  it  further  enacted: 

That  the  affairs  of  all  associations  for  banking  purposes  formed  hereunder  shall 
be  managed  by  its  board  of  directors,  which  may  be  in  legal  session  on  any  Monday 


26 

from  10  A.  M.  wherein  a  quorum  is  present,  and  on  any  other  day  where,  after 
notice,  a  quorum  may  be  present,  or  to  which  a  regular  session  may  be  adjourned, 
a  quorum  being  present. 

Every  director  shall  be  a  citizen  of  the  United  States  during  his  whole  term  of 
service;  and  at  least  three-fourths  of  the  directors  shall  have  resided  in  the  state, 
or  territory  or  district  in  which  such  association  is  located  one  year  next  preced- 
ing their  election  or  appointment  as  directors,  and  shall  be  residents  thereof  during 
their  term  of  office.  Each  director  shall  own  in  his  own  right  at  least  ten  shares 
of  the  capital  stock  of  the  association.  Each  director,  when  elected  or  appointed, 
shall  take  an  oath  that  he  will,  so  far  as  the  duty  devolves  upon  him,  diligently 
and  honestly  administer  the  affairs  of  such  association,  and  will  not  knowingly 
violate,  or  willingly  permit  to  be  violated,  any  of  the  provisions  of  this  act,  and ; 
that  he  is  the  bona  fide  owner  in  his  own  right  of  ten  shares  of  the  capital  stock  of! 
the  association,  standing  in  his  own  name  on  the  books  of  the  association,  and  that 
the  same  is  not  hypothecated  or  in  any  way  pledged  as  security  for  any  loan,  debt 
or  obligation ;  which  oath  subscribed  by  him  and  duly  certified,  as  required  by 
law,  shall  be  immediately  transmitted  to  the  Comptroller  of  Finance  and  by  him 
filed  and  preserved  in  his  office. 

SEC.  14.  And  be  it  further  enacted : 

That  the  directors  of  any  association  first  appointed  shall  hold  office  until  their 
successors  shall  be  elected  and  qualified.  All  elections  shall  be  held  on  the  second 
Tuesday  of  January  of  each  year,  and  the  directors  as  elected  shall  hold  their , 
places  until  their  successors  are  elected  and  qualified.  Any  vacancy  occurring  by 
reason  of  a  director  ceasing  to  own  the  required  amount  of  stock,  or  from  any 
other  cause,  shall  be  filled  by  appointment  by  the  board.  If  from  any  cause  an 
election  shall  not  be  held  at  the  time  designated,  it  may  be  held  on  any  subsequent 
day  by  publishing  thirty  days'  notice  thereof  in  a  local  daily  paper. 

SEC.  15.  And  be  it  further  enacted : 

That  in  all  meetings  of  the  stockholders  each  share  of  stock  shall  be  entitled 
to  one  vote  on  all  questions.  Shareholders  may  vote  by  proxies,  duly  authorized 
in  writing.  None  but  shareholders  can  use  or  hold  a  proxy. 

SEC.  16.  And  be  it  further  enacted: 

That  the  shares  of  stock  may  be  transferred  on  the  books  of  the  association  in 
such  manner  as  may  be  prescribed  in  the  by-laws  of  the  association.  No  transfer 
shall  be  made  of  stock  where  the  holder  is  indebted  to  the  association  in  any  man- 
ner; but  the  association  has  a  lien  on  all  of  its  stock  for  such  indebtedness.  Every 
person  becoming  a  shareholder  by  transfer,  or  otherwise,  shall,  in  proportion  toi 
his  shares,  succeed  to  all  the  rights  and  liabilities  of  the  prior  holder  of  such 
shares,  and  no  change  shall  be  made  in  the  articles  of  association  by  which  the 
rights,  remedies  and  securities  of  the  existing  creditors  of  the  association  shall  be 
impaired.  The  shareholders  of  each  association  formed  under  the  provisions  of 
this  act,  and  of  each  existing  bank  or  banking  association  that  may  accept  the  pro-| 
visions  of  this  act,  shall  be  held  individually  responsible,  equally  and  ratably,  and, 
not  one  for  the  other,  for  all  contracts,  debts  and  engagements  of  such  associations 
to  the  extent  of  the  amount  of  their  stock  therein,  at  par  thereof,  in  addition  to 
the  amount  invested  in  such  shares. 

SEC.  17.  And  be  it  further  enacted: 

That  the  capital  stock  or  the  reserve  security  of  any  association  formed  here- 


27 

i under  may  be  increased  or  decreased  within  the  limits  fixed  for  the  capital  stock 
i  or  the  reserve  security  by  this  act  by  a  two-thirds  vote  of  its  shareholders  at  any 
!  annual  meeting  in  January.  The  increase  or  decrease  of  capital  stock  or  the 
reserve  security  shall  be  made  by  complying  with  the  requirements  of  this  act  as 
I  to  the  formation  of  such  associations  in  the  first  instance,  and  by  complying  with 
such  additional  requirements  as  the  Comptroller  of  Finance  may  deem  best  to 
secure  the  interests  of  all  parties  concerned,  provided  that  in  the  decrease  of  the 
reserve  security  the  association  so  decreasing  its  reserve  security  shall  surrender  to  the  Comp- 
troller of  Finance  circulating  notes  received  thereon  to  the  amount  of  the  decrease.  In  such  cases 
the  Comptroller  of  Finance  may,  in  his  discretion,  release  from  the  effect  of  this  act  a  pro  rata  of 
the  bo i ids  or  real  estate  described  in  the  certificate  of  organization,  but  this  shall  only  be  done  in 
cases  where  the  Comptroller  of  Finance  shall  find  the  association  to  be  solvent.  The  maximum 
or  minimum  of  such  increase  or  decrease  shall  be  determined  by  (he  Comptroller  of  Finance. 

Any  association  organized  hereunder  may  close  up  its  business  and  dissolve  its 
organi/ation  by  a  vote  of  its  stockholders  had  at  the  annual  meeting  in  January.  In 
such  cases  the  association  must  first  settle  all  of  its  outstanding  obligations  and 
return  to  the  Comptroller  of  Finance  the  circulating  notes  received  on  its  reserve 
security.  The  Comptroller  of  Finance,  upon  receipt  of  a  statement  of  the  forego- 
ing facts  duly  authenticated  by  the  directors  of  said  association  under  oath,  shall 
fully  investigate  the  matters  pertaining  thereto;  and  upon  being  satisfied  that  all 
obligations  of  said  assoc'ation  are  fully  satisfied  and  discharged,  shall  cause  said 
statement  to  be  published  for  at  least  sixty  days  in  a  local  newspaper,  and  shall 
also  cause  a  notice  thereof  to  be  inserted  in  the  United  States  Bulletin  of  Finance 
for  the  same  period.  If  any  objections  to  the  dissolution  are  filed  with  the  Comp- 
troller of  Finance  before  the  expiration  of  said  sixty  days,  he  shall  determine  and 
adjust  any  matters  therein  objected  to;  when  so  adjusted,  or  if  no  objections  are 
filed  with  him,  he  shall  issue  a  certificate  dissolving  said  association  and  releasing 
the  bonds  or  real  estate  described  in  the  certificate  of  organization  from  any  further 
claim  or  demand  thereon.  Said  certificate  of  dissolution  shall  be  by  him  duly 
signed,  sealed  and  acknowledged  so  as  to  entitle  the  same  to  record  in  the  office 
where  the  certificate  of  organization  was  recorded.  The  Comptroller  of  Finance 
shall  duly  record  said  certificate  of  dissolution  in  his  office,  and  tlrereafter  shall 
transmit  the  same  to  said  association  upon  the  same  being  duly  recorded  in  the 
office  where  the  certificate  of  organization  was  recorded.  The  association  will  thereby 
be  completely  dissolved. 

SEC.  18.  And  be  it  further  enacted : 

That  if  at  any  time  the  value  of  the  real  estate  described  in  the  certificate  of  organization  shall 
deprecidte  in  value,  to  be  decided  by  the  Comptroller  of  Finance,  he  may  require  any  portion  of  the 
circulating  notes  of  the  association's  reserve  security  to  be  surrendered  to  the  Comptroller  of  Finance, 
"ay  require  further  real  estate  security  as  in  the  original  formation  of  the  association. 
Should  the  Comptroller  of  Finance  at  any  time  deem  the  affairs  of  said  association 
unsafe  from  any  cause,  he  may  appoint  a  special  agent  or  agents  under  his  hand  and 
seal  of  office,  who  shall  have  power  to  inspect  all  the  affairs  of  said  association,  and 
to  close  up  its  affairs  to  the  best  possible  advantage  to  all  parties  interested.  To  this 
end  he  shall  have  power  to  bring  or  defend  any  suit  in  the  name  of  the  association, 
and  to  sell  at  public  or  private  sale  any  or  all  of  the  real  estate  described  in 
the  certificate  of  organization,  and  to  execute  proper  conveyances  thereof,  and 
use  the  proceeds  to  close  up  the  affairs  of  the  association.  He  shall  also  have 
power  to  collect  from  the  stockholders  the  amount  for  which  they  are  responsible 
under  this  act,  and  to  use  the  same  to  close  up  the  accounts.  He  shall  give  such 


28 

bonds  for  faithful  performance  of  his   duties  hereunder  as  the  Comptroller  of 
Finance  may  require.     His  certificate  of  appointment  shall  be  duly  acknowledged 
and  recorded  as  the  other  certificates  are  required  to  be.     The  Government  shall' ' 
be  a  preferred  creditor  in  all  such  cases  as  are  provided  for  in  this  section. 

SEC.  19.  And  be  it  further  enacted: 

That  the  directors  may  semi-annually  declare  dividends  from  the  net  profits 
the  association,  but  such  association  before  it  shall  declare  a  dividend  shall 
at  least  ten  per  cent,  of  its  net  profits  to  a  reserve  fund  until  said  reserve  fund  sh 
equal  the  capital  stock  of  said  association. 

SEC.  20.  And  be  it  further  enacted: 

That  it  shall  be  lawful  for  any  association  hereunder  to  purchase,  hold  and 
convey  real  estate  as  follows: 

First.— Such  as  shall  be  necessary  for  its  immediate  accommodation  in  the 
transaction  of  its  business  and  for  its  reserve  security. 

Second.— Such  as  shall  be  mortgaged  to  it  in  good  faith  by  way  of  security  for 
debts  previously  contracted  or  for  loans  made  thereon. 

Third. — Such  as  shall  be  conveyed  to  it  in  satisfaction  of   debts  previ 
incurred  in  the  course  of  its  dealings. 

Fourth.— Such  as  it  shall  purchase  at  sales  under  judgments,  decrees,  or  m< 
gages  held  by  the  association,  or  shall  purchase  to  secure  debts  due  to  said  associa- 
tion. 

Such  association  shall  not  purchase  or  hold  real  estate  for  any  other  purpost 
than  as  herein  specified.  Provided  that  all  such  real  estate  acquired  other  than  for 
the  purpose  of  the  business  of  the  association  shall  be  sold  within  five  years  aftei 
it  is  obtained  by  the  association. 

SEC.  21.  And  be  it  further  enacted  : 

That  each  association  may  charge  such  rates  of  interest  as  may  be  allowed  b; 
local  laws  wAre  the  association  is  situated.  Each  association  shall  keep  on  ban 
in  cash  an  amount  equal  to  at  least  twenty-five  per  cent,  of  the  amount  of : 
deposits,  when  the  reserve  amount  shall  fall  below  said  percentage.  No  mor< 
dividends  or  loans  shall  be  made  until  the  amounts  called  in  shall  restore  the  said 
percentage. 

SEC.  22.  And  be  it  further  enacted  : 

That  every  association  hereunder  shall  make  to  the  Comptroller  of  Finance  a 
report,  according  to  the  form  which  may  be  prescribed  by  him,  verified  by  the  oatli 
or  affirmation  of  the  president  or  cashier  of  such  association,  which  report  shall) 
among  other  things,  exhibit  in  detail,  and  under  appropriate  heads,  the  resource 
and  liabilities  of  the  association,  and  the  last  assessment  valuation  of  its  real  esto 
before  the  commencement  of  business  on  the  morning  of  the  first  Monday  of  tt 
months  of  January,  April,  July  and  October  of  each  year,  and  shall  transmit  tl 
same  to  the  Comptroller  of  Finance  within  five  days  thereafter.     And  any  bank  fail- 
ing to  transmit  such  report  shall  be  subject  to  a  penalty  of  one  thousand  dollai 
for  each  day  after  said  five  days  that  said  report  is  delayed  beyond  that  time.    ' 
Comptroller  shall  cause  abstracts  of  said  reports  to  be  published  in  the  Vni 
States  Bulletin  of  Finance,  and  the  separate  report  of  each  association  shall  be  pufc 
lished  by  the  association  in  a  local  daily  newspaper  for  at  least  one  week. 


29 

ion  shall  forward,  icith  each  quarterly  report,  one-fourth  of  one  per  cent,  of  the  cash  used 
-serve  security,  during  the  preceding  quarter,  as  interest  thereon,  on  sums  not  to  exceed 
0,  and  one-half  of  one  per  cent,  on  the  excess  over  $100,000  and  less  than  $200,000,  and 
irths  ofoneper  cent,  on  the  excess  over  $200,000  and  less  than  $300,000,  and  one  per  cent, 
tcess  of  $300,000  and  less  than  $400,000  ;  thereafter  the  rate  shall  increase  one  per  cent, 
nal  on  each  additional  $100,000  used;  and  in  case  of  default  in  the  payment 
•',  by  any  association,  said  interest  may  be  collected  in  the  manner  provided 

collection  of  United  States  duties  of  other  corporations.  In  addition  to  the 
;ly  reports  required  herein,  every  association  shall,  on  the  first  Tuesday  of 
onth,  make  to  the  Comptroller  of  Finance  a  statement  under  oath  of  the 
ynt,  or  the  cashier,  showing  the  condition  of  the  association  making  such 
ent,  in  respect  to  the  average  amount  of  loans  and  discounts,  specie  and 
ting  notes  on  hand  belonging  to  the  association,  Clearing  House  certificates, 
;s,  and  such  other  matters  as  the  Comptroller  of  Finance  may  require. 

.  23.  And  be  it  further  enacted: 

,t  no  association  shall  make  loans  or  discount  on  the  security  of  the  shares 
wn  capital  stock,  nor  be  the  purchaser  or  holder  of  any  such  shares  unless 
ecurity  or  purchase  shall  be  necessary  to  prevent  loss  upon  a  debt  previously 
ted  in  good  faith ;  and  stock  so  purchased  or  acquired  shall  be  sold  within 
nths  from  the  time  of  its  purchase.  But  no  such  purchase  or  sale  shall 
the  former  owner  thereof  from  his  pro  rata  of  responsibility  for  all  debts 
d  1  y  the  association  prior  to  sale  and  transfer  to  a  new  purchaser  in  good 


24.  And  be  it  further  enacted: 

t  no  association,  or  any  member  thereof,  shall,  during  the  time  it  shall 
e  its  banking  operations,  withdraw,  or  permit  to  be  withdrawn,  either  in 
m  of  dividends  or  otherwise,  any  portion  of  its  capital  or  reserve  fund. 

any  losses  shall  at  any  time  have  been  sustained  by  any  such  association 
>  or  exceeding  its  undivided  profits  then  on  hand  in  cash,  no  dividend  shall 
e;  and  no  dividend  shall  ever  be  made  by  any  association,  while  it  shall 
e  its  banking  operations,  to  an  amount  greater  than  its  net  profits  then  on 
educting  therefrom  its  losses  and  bad  debts  and  ten  per  cent,  for  the 
fund.  And  all  debts  due  any  association,  on  which  the  interest  is  past  due 
3aid  for  a  period  of  six  months,  unless  the  same  shall  be  well  secured  and 

in  process  of  collection,  shall  be  considered  bad  debts  within  the  meaning 
act. 

25.  And  be  it  further  enacted  : 

5  the  president  and  cashier  of  every  such  association  shall  cause  to  be  kept 
mes  a  full  and  correct  list  of  the  names  and  residences  of  all  the  shareholders 
ssociation,  and  the  number  of  shares  held  by  each,  in  the  office  where  its 
s  is  transacted  ;  and  such  list  shall  be  subject  to  public  inspection  during 
hours  of  each  day  in  which  business  may  be  legally  transacted.  A  copy 
ist  shall  be  sent  with  each  quarterly  report  to  the  Comptroller  of  Finance. 

26.  And  be  it  further  enacted  : 

the  directors  of  any  Ixink  incorporated  under  any  national  or  slate  laic  may,  upon  the 
iion  of  the  owners  of  two-thirds  of  the  capital  stock,  in  writing,  dnly  signed  and 
dyed,  avail  thfinvidves  of  the  provisions  of  this  act  and  become  a  national  association 


under  their  corporate  name  ly  complying  with  the  provisions  of  this  act.  The  sale. 
directors  being  by  said  vote  authorized  to  execute  all  papers  relating  thereto.  Any 
matters  not  herein  provided  for  in  such  cases  shall  be  adjusted  by  the  Comptroller 
of  Finance  in  accordance  with  the  spirit  and  intention  of  this  act. 

SEC.  27.  And  be  it  further  enacted  : 

That  all  associations  under  this  act,  when  designated  for  that  purpose  by  the 
Secretary  of  the  Treasury,  shall  be  depositaries  of  public  money,  except  receipts 
from  customs,  under  such  regulations  as  may  be  prescribed  by  the  Secretary;  and 
they  may  also  be  employed  as  financial  agents  of  the  Government ;  and  they  shall 
perform  all  such  reasonable  duties,  as  depositaries  of  public  moneys  and  financial 
agents  of  the  Government,  as  may  be  required  of  them.  And  the  Secretary  of  the 
Treasury  shall  require  of  the  association  thus  designated,  satisfactory  security  in 
real  estate  for  the  safe  keeping  and  prompt  payment  of  public  funds  deposited 
with  them,  and  for  the  faithful  performance  of  their  duties  as  financial  agents  of 
the  Government. 

SEC.  28.  And  be  it  further  enacted: 

That  all  transfers  of  the  assets  or  any  part  thereof,  of  any  association  doing 
business  hereunder,  made  after  the  commission  of  an  act  of  insolvency,  or  in  con- 
templation thereof,  with  a  view  to  prevent  the  application  of  it  as  assets  in  the 
manner  prescribed  in  this  act,  or  with  a  view  to  the  preference  of  one  creditor  to 
another,  shall  be  utterly  null  and  void. 

SEC.  29.  And  be  it  further  enacted  : 

TChat  any  director,  officer  or  employee,  of  any  association  organized  hereunder, 
who  shall  knowingly  violate,  or  permit  any  of  such  persons  to  violate  the  provis- 
ions of  this  act,  shall  be  removed  forthwith  from  his  position,  by  the  proper 
authority  of  the  association,  or  by  the  order  of  the  Comptroller  of  Finance.  And 
any  director,  officer  or  employee  of  such  association  who  shall  so  transact  the  busi- 
ness of  such  association,  or  any  part  of  it,  as  to  intentionally  defraud  the  association 
or  any  one  else,  or  with  the  intention  to  deceive  or  mislead  any  officer  of  the  asso- 
ciation, or  any  agent  appointed  to  examine  the  affairs  of  any  such  association,  shall 
be  deemed  guilty  of  a  misdemeanor,  and  upon  conviction  thereof  shall  be  punished 
by  imprisonment  for  not  more  than  ten  years. 

SEC.  30.  And  be  it  further  enacted  : 

That  all  suits  and  proceedings  arising  out  of  the  provisions  of  this  act,  in  which 
the  United  States  or  its  agents  or  officers  shall  be  parties,  shall  be  conducted  by 
the  district  attorneys  of  the  several  districts,  under  the  direction  and  supervision 
of  the  Solicitor  of  the  Treasury.  And  that  all  suits  or  actions  arising  under  the 
provisions  of  this  act,  may  be  had  in  any  circuit,  district  or  territorial  court  of  the 
United  States  held  within  the  district  in  which  the  association  may  be  established, 
or  in  any  state,  county  or  municipal  court  in  the  jurisdiction  of  which  said  associ- 
ation is  established,  which  has  jurisdiction  in  similar  cases. 

SEC.  31.  And  be  it  further  enacted: 

That  if  any  person  shall  falsely  make,  forge  or  counterfeit,  or  cause  or  procure 
to  be  made,  forged  or  counterfeited,  or  willingly  aids  or  assists  in  forging  or  coun- 
terfeiting any  note  in  imitation  of  or  purporting  to  be  in  imitation  of  the  circulating 
notes  issued  under  the  provisions  of  this  act,  or  shall  pass,  utter  or  publish,  or  at- 


31 

tempt  to  pass,  utter  or  publish  any  false,  forged  or  counterfeited  note  purporting 
to  be  issued  under  the  provisions  of  this  act,  knowing  the  same  to  be  falsely  made, 
forged  or  counterfeited,  or  shall  falsely  alter,  or  cause  or  procure  to  be  falsely  al- 
tered, or  willingly  aids  or  assists  in  falsely  altering  any  such  circulating  notes 
issued  under  the  provisions  of  this  act,  or  shall  pass,  utter  or  publish,  or  shall 
attempt  to  pass,  utter  or  publish  as  true,  any  falsely  altered  or  spurious  circulating 
notes  issued,  or  purporting  to  have  been  issued  under  the  provisions  of  this  act, 
knowing  the  same  to  be  falsely  altered,  or  spurious,  every  such  person  shall  be 
deemed  and  adjudged  guilty  of  a  felony,  and  being  thereof  convicted  shall  be  sen- 
tenced to  be  imprisoned  and  kept  at  hard  labor  for  a  period  of  not  ]ess  than  five 
years  nor  more  than  twenty  years,  and  fined  in  a  sum  not  exceeding  one  thousand 
dollars. 

SEC.  32.  And  be  it  further  enacted: 

That  if  any  person  shall  make  or  engrave,  or  cause  or  procure  to  be  made  or 
engraved,  or  shall  have  in  his  custody  or  possession  any  plate,  die  or  block  after 
the  similitude  of  any  plate,  die  or  block  from  which  any  circulating  notes  issued 
as  aforesaid  shall  have  been  prepared  or  printed,  with  intent  to  use  such  plate,  die 
or  block,  or  cause  or  suffer  the  same  to  be  used  in  forging  or  counterfeiting  any  of 
the  notes  issued  as  aforesaid,  or  shall  have  in  his  custody  or  possession  any  blank 
note  or  notes  engraved  aud  printed  after  the  similitude  of  any  notes  issued  as  afore- 
said with  intent  to  use  such  blanks,  or  cause  or  suffer  the  same  to  be  used  in  forg- 
ing or  counterfeiting  any  of  the  notes  issued  as  aforesaid,  or  shall  have  in  his 
custody  or  possession  any  paper  adapted  to  the  making  of  such  notes,  and  similar 
to  the  paper  upon  which  any  such  notes  shall  have  been  issued,  with  intent  to  use 
such  paper,  or  cause,  or  suffer  the  same  to  be  used  in  forging  or  counterfeiting 
any  of  the  notes  issued  as  aforesaid,  every  such  person,  being  thereof  convicted  by 
due  course  of  law,  shall  be  sentenced  to  be  imprisoned  and  kept  at  hard  labor  fbr 
a  term  not  less  than  five  or  more  than  twenty  years,  And  fined  in  a  sum  not 
ding  one  thousand  dollars. 

SEC.  33.  And  be  it  further  enacted  : 

'Lhat  the  Comptroller  of  Finance  shall  cause  to  be  prepared  each  month  concise  information 
showing  the  amount  of  circulating  notes  issued  .during  the  preceding  month,  and  the  amount  of 
circulating  notes,  gold  and  silver  coin,  in  each  state,  territory,  district,  and  in  the  principal 
cities  of  the  United  States,  and  also  the  amount  in  the  various  vaults  or  Treasuries  of  the 
United  States.  Also  the  amounts  expended  by  the  Government  in  each  state,  territory  or  dis- 
trict. It  shall  also  contain  the  name  of  each  bank,  the  amount  of  its  capital  stock,  its  reserve 
fund,  and  its  losses  for  the  preceding  month,  and  such  other  information  as  shall  be  deemed  of 
sufficient  value  to  the  financial  interest  of  the  people  to  be  published.  Such  information  shall  be 
published  monthly  by  the  Department. of  Printing  in  pamphlet  form,  of  convenient  size  for  per- 
manent binding  in  book  form.  One  copy  of  each  issue  shall  be  sent  monthly  to  each  of  the 
following  parties :  To  each  association  doing  business  hereunder,  to  the  President  and  each 
member  of  his  Cabinet,  to  each  member  of  Congress,  and  to  such  other  officers  of  the  Government 
as  the  Comptroller  of  Finance  may  direct.  Also  to  the  Governor  of  each  state,  territory  or  dis- 
trict, and  to  each  public  library,  university  or  college  applying  therefor.  Any  person  may  have 
a  copy  forwarded  to  his  address  for  one  year  by  first  forwarding  to  the  Comptroller  of  Finance 
the  sum  of -one  dollar.  All  subscriptions  shall  end  with  the  December  number  of  each  year. 
Subscriptions  made  during  the  year  shall  be  at  the  rate  of  ten  cents  per  copy  for  the  remaining 
months  of  the  year. 


32 


it  from 


SEC.  34.  And  be  it  further  enacted  : 

That  as  the  circulating  medium  shall  accumulate  in  the  Treasury  of  the  Government  fi 
revenue  or  otherwise,  it  shall  be  returned  to  circulation  among  the  people  in  addition  to  the  ways 
hereinbefore  specified,  by  paying  the  current  expenses  of  the  Government;  by  the  purchase  of 
suitable  grounds  and  the  erection  thereon  of  suitable  buildings  for  post  offices  and  other  uses  of 
the  Government;  by  the  construction  of  such  other  works  as  shall  be  deemed  by  Congress  for 
best  interests  of  the  public.  The  expenditures  shall  be  made  annually,  in  each  state,  territory 
district  as  nearly  as  may  be,  in  proportion  to  the  number  of  its  inhabitants,  provided  that  states 
already  supplied  with  public  buildings  shall  not  receive  additional  expenditures  until  the  other 
states,  territories  or  districts  shall  have  had  their  equal  proportions.  All  public  work  shall  be 
done  by  day's  labor,  at  the  rate  of  one  dollar  and  fifty  cents  per  day  for  eight  hours  work  for 
common  labor.  A  less  rate  shall  be  paid  where  the  laborer  is  not  able  to  perform  a  reasonable 
day's  work.  The  expenditures  hereunder  shall  be  as  directed  from  time  to  time  by  Congress. 

SEC.  35.  And  be  it  further  enacted  : 

That  all  notes  issued  hereunder  and  all  money  received  by  the  Comptroller  of 
Finance  hereunder  shall  be  deposited  in  the  Treasury  of  the  United  States.  And 
the  Comptroller  of  Finance  shall  keep  an  itemized  account  of  the  sources  from 
which  received,  wifh  the  dates  thereof. 

SEC.  36.  And  be  it  further  enacted  : 

That  all  improvements  on  property  described  in  the  certificate  of  organization  shall  be  kept 
insured  by  the  association  to  the  full  amount  of  its  assessed  value,  payable  to  the  Comptroller  of 
Finance,  and  all  insurance  on  such  property,  in  whatever  name  insured,  shall,  in  case  of  loss,  be 
paid  by  the  insurance  company  to  the  Comptroller  of  Finance,  to  be  by  him  disposed  of,  with  the 
consent  of  the  Secretary  of  the  Treasury,  as  they  may  deem  best  in  the  interest  of  the  various 
parlies  concerned. 

SEC.  37.  And  be  it  further  enacted  : 

•That  it  shall  be  unlawful  for  any  officer  acting  under  the  provisions  of  this  act 
to  countersign  or  deliver  to  any  association,  or  to  any  other  company  or  person, 
any  circulating  notes  contemplated  by  this  act,  except  as  herein  provided,  and  in 
accordance  with  the  true  intent  and  meaning  of  this  act.  And  any  officer  who 
shall  violate  the  provisions  of  this  section  shall  be  deemed  guilty  of  a  high  mis- 
demeanor, and  on  conviction  thereof  shall  be  punished  by  a  fine  not  exceeding 
double  the  amount  so  countersigned  and  delivered,  and  imprisoned  for  not  less 
than  one  year  and  for  not  exceeding  fifteen  years. 

SEC.  38.  And  be  it  further  enacted  : 

That  if  the  directors  of  any  association  shall  knowingly  violate  orlmowingly 
permit  any  of  the  officers,  agents  or  servants  of  the  association  to  violate  any  of 
the  provisions  of  this  act,  all  the  rights,  privileges  and  franchises  of  the  association 
derived  from  this  act  shall  be  thereby  forfeited.  Such  violation  shall  be  first 
determined  and  adjudged  by  a  proper  circuit,  district,  or  territorial  court  of  the 
United  States,  in  a  suit  brought  for  that  purpose  in  the  name  of  the  Comptroller 
of  Finance,  which  decree  shall  adjudge  the  association  dissolved.  Thereupon  the 
affairs  of  the  association  shall  be  closed  up  by  the  Comptroller  of  Finance,  and  in 
case  of  such  violation,  every  director  who  participated  in  or  assented  to  the  same 
shall  be  held  liable  in  his  personal  and  individual  capacity  for  all  damages  which 
the  association,  its  shareholders,  or  any  other  person  shall  have  sustained  in  conse- 
quence of  such  violation.  Such  directors  shall  thereafter  be  disqualified  for  the 
office  of  director  in  any  association  formed  hereunder  ;  and  any  president,  direc- 


33 

tor,  cashier,  teller,  clerk  or  agent  of  any  association  who  shall  embezzle,  abstract 
or  willfully  misapply  any  of  the  moneys,  funds  or  credits  of  the  association,  or 
shall,  without  authority  from  the  directors,  issue  or  put  forth  any  certificate  of 
deposit,  draw  any  order  or  bill  of  exchange,  make  any  acceptance,  assign  any  note, 
bond  or  draft,  bill  of  exchange,  mortgage,  judgment  or  decree,  or  shall  make  any 
false  entry  in  any  book,  report  or  statement  of  the  association,  with  intent  in 
either  case  to  injure  or  defraud  the  association;  or  any  other  company,  body  poli- 
tic or  corporate,  or  any  individual  person,  or  to  deceive  any  officer  of  the  associa- 
tion, or  any  agent  appointed  to  examine  the  affairs  of  any  such  association,  shall 
be  deemed  guilty  of  a  misdemeanor,  and  upon  conviction  thereof  shall  be  punished 
by  imprisonment  not  less  than  one  and  not  more  than  ten  years. 

SEC.  39.  And  be  it  further  enacted  : 

That  the  Comptroller  of  Finance,  with  the  approbation  of  the  Secretary  of  the 
Treasury,  as  often  as  shall  be  deemed  necessary  or  proper,  shall  appoint  a  suit- 
able person  or  persons  to  make  an  examination  of  the  affairs  of  every  banking  asso- 
ciation formed  hereunder,  which  person  or  persons  shall  not  be  a  director  or  other 
officer  or  employee  in  any  association  whose  affairs  he  shall  be  appointed  to  exam- 
ine, and  who  shall  have  power  to  make  a  thorough  examination  into  all  the  affairs 
of  the  association,  and,  in  doing  so,  to  examine  any  of  the  officers  and  agents 
thereof  on  oath,  and  shall  make  a  full  detailed  report  of  the  condition  of  the  asso- 
ciation to  the  Comptroller.  And  the  association  shall  not  be  subject  to  any  other 
visitorial  powers  than  such  as  are  authorized  by  this  act,  except  such  as  are  vested 
in  the  several  courts  of  law  and  chancery.  And  every  person  appointed  to  make 
such  examination  shall  receive  for  his  services  at  the  rate  of  five  dollars  for  each 
day  employed  by  him  in  such  examination,  and  two  dollars  for  each  twenty-five 
miles  he  shall  necessarily  travel  in  the  performance  of  his  duty. 

SEC.  40.  And  be  it  further  enacted  : 

That  persons  "holding  stock  as  executors,  guardians,  administrators  or  trustees 
shall  not  be  personally  subject  to  any  liabilities  as  stockholders,  but  the  estates 
and  funds  in  their  hands  shall  be  liable  in  like  manner  and  to  the  same  extent  as 
the  testator,  intestate,  ward,  or  person  interested  in  said  trust  funds  would  be  if 
they  were  respectively  living  and  competent  to  act  and  hold  the  stock  in  their  own 
names. 

SEC.  41.  And  be  it  further  enacted: 

Tlmt  hereafter  no  associations  for  the  purpose  of  banking  shall  be  formed  except  under  the 
provisions  of  this  act,  and  all  banking  institutions  now  formed  under  the  provisions  of  prior 
acts  of  Congress  shall  be  allowed  to  continue  under  such  acts  until  their  proper  term  of  existence 
has  expired. 

SEC.  42.  And  be  it  further  enacted : 

That  the  present  Comptroller  of  Currency  shall  hereafter  be  known  as  the  Comptroller  of 
Finance,  under  this  act,  and  under  such  name,  shall  with  the  bureau  now  established,  perform  al 
duties  required  under  the  various  acts  of  Congress  relating  to  currency  or  a  circulating  medium. 

SEC.  43.  And  be  it  further  enacted  : 

That  all  acts  or  parts  of  an  act  in  conflict  with  the  provisions  of  this  act  are 
hereby  repealed,  and  Congress  may  at  any  time  amend,  alter  or  repeal  this  act. 


[X8737] 


INCREASED  VOLUME  OF  MONEY. 


AN    ADDRESS 


The  California  Bankers'  Association, 


AT  LOS  ANGELES. 


— BY — 


R.  M.  WIDNEY,    LL.  D.,    PRESIDENT 


—  OF    TIIK — 


University  Bank  of  Los  Angeles,  California, 


MARCH  i3th,  1891. 


In  support  of  the  following'  resolution  introduced  by  the  speaker,  and  which  received  the 
unanimous  vote  of  the  convention, 

Resolved,  That  this  convention  respectfully  request  Congress  at  its  next 
session  to  devise  a  uniform  money  system  for  the  people  of  the  United  States, 
with  the  gold  dollar  as  the  standard  or  unit  of  value  ;  using  gold,  silver  and  cur- 
rency for  a  circulating  medium,  in  a  sufficient  volume  to  fully  meet  and  keep  pace 
with  the  growing  wants  of  the  business  of  the  country ;  founding  the  issue  of  cur- 
rency upon  the  wealth  ot  the  whole  nation  ;  making  gold,  silver  and  currency  a 
legal  tender,  and  exchangeable  at  par  on  demand,  and  fixing  by  a  constitutional 
amendment  the  legality  of  such  a  circulating  medium,  and  preventing  the  dangers 
of  inflation,  contraction,  repudiation,  or  change  in  the  standard  of  value. 


The  most  critical  period  in  the  history  of  the  present  political  par- 
ties that  has  arisen  since  the  war  will  occur  in  the  next  session  of 
Congress,  and  on  this  question  of  increased  volume  of  money. 


Either  our  circulating  medium  must  be  increased  sufficiently  to  meet 
the  wants  of  our  growing  country,  or  the  business  of  the  country  must 
be  killed  off  until  it  is  within  the  compass  of  our  present  circulation. 


INCREASE  OF  CIRCULATING  MEDIUM. 


Judge  Widney  addressed  the  Convention  as  follows: 

Mr.  President  and  Gentlemen  of  the  Comvention  :— 

In  addressing  you  on  the  subject  of  this  resolution  I  wish  to  say  in  beginning 
that  the  statistics  presented  in  my  address  are  gathered  from  official  reports  and 
public  sources.  You  are  at  liberty  to  draw  your  own  conclusions  from  them. 

BANKING. 

Banking  is  a  science  based  on  natural  laws.  There  is  very  little  chance  in  it 
Carried  on  pursuant  to  these  laws  it  succeeds:  If  these  laws  are  violated  to 
that  extent,  loss  and  failure  occur.  It  is  as  much  one  of  the  d  partments  of 
civilized  society  as  law,  medicine  or  statesmanship.  It  is  under  obligations  to 
society  to  keep  this  department  of  the  social  fabric  in  good  working  order.  It  is 
not  a  robber  of  society,  nor  a  machine  to  transfer  the  property  of  the  many  to 
the  few.  It  should  so  handle  money  as  to  eniich  humanity,  as  well  as  the 
bankers.  In  fact  the  law  is  that  bankers  flourish  best  when  the  whole  community 
or  nation  is  most  prosperous .  Banking  should  be  a  great  power  to  builld  up 
the  industries  of  the  people,  in  establishing  manufactories,  planting  vineyards 
and  orchards,  cultivating  and  improving  farms,  building  cities  and  railroads  and 
establishing  commerce  for  the  nation. 

Banks  should  be  a  place  where  the  unused  money  of  the  people  can  be  safely 
kept  and  under  safe  rules  of  business,  loaned  to  those  who  want  it  for  legitimate 
safe  use.  Among  these  should  be  classified  as  of  first  importance,  time  loans  to 
develop  the  industries  and  productive  enterprises  of  a  community. 

No  system  of  call  loans  or  thirty  or  ninety  day  loans  can  develop  the  re- 
sources of  a  country.  Who  can  plant  a  farm,  vineyard,  orchard  or  start  a  manu- 
facturing enterprise,  or  build  a  railroad  on  a  call  loan  or  on  ninety  day  paper? 
Such  loans  can  only  be  used  in  stock  or  speculation  and  to  a  limited  ex- 
tent in  established  retail  business.  Speculative  enterprise  should  rarely  receive 
loans  from  depositors'  money.  By  such  I  mean  all  cases  where  property  is 
bought  on  a  margin  or  on  part  payment,  to  sell  on  a  rise  of  the  market.  Persons 
thus  dealing  should  be  confined  to  the  use  of  their  own  money. 

As  society  delegates  this  financial  power  to  bankers,  and  pays  them  for  using 
it,  they  in  return  should  scientifically,   historically  and  systematically  study  the 


4  VOLUME  OF  CURRENCY. 

subject  and  solve  the  money  problems  of  society  so  as  to  upbuild  the  interests  of 
society  and  protect  its  property. 

Would  not  society  cry  out  against  its  doctors  and  lawyers,  and  statesmen  if 
they  failed  to  solve  the  problem  of  their  department?  Can  we  not  here  find  the 
real  ground  for  popular  complaint  against  banks? 

STORMS. 

Financial  storms  periodically  sweep  over  not.  only  our  own  country,  but  over 
the  nations  of  the  earth.  They  seem  to  come  locally  about  every  ten  years,  and 
internationally  and  generally  about  every  thirty  years.  In  recent  decades,  as 
the  world  increases  the  rapidity  of  its  growth  and  development,  the  storms  in- 
crease in  intensity  and  frequency. 

The  wreck  of  the  last  financial  storm  in  the  United  States  was  frightful. 

The  failures  were  over $190,000,000 

The  shrinkage  in  New  York  stocks  and  bonds  was  over  ....  300,000,000 

Shrinkage  of  values  in  the  United  States  over ro,ooo,ooo,< 

Because  the  banks  wanted  more  money  they  forced  in  loans  to 

an  amount  of  over 100,000, 

The  United  States  Treasury  paid  out  over 2Oo,ooo,< 

The  banks  then  issued  panic  certificates  to  the  amount  of.  ...  3o,ooo,( 
And  the  United  States  Treasury  deposited  with  banks  to  help  the 

situation     30,047,1: 


Goldwas'also  shipped  from  England  and  California  to  help  the  situation  in 
the  east.     Yet  on  top  of  all  this  one  of  the  National  Bank  Examiners  told  me    -\ 
in  the  early  part  of  last  December,  while  in  an  eastern  city,  "  That  they  did  not 
dare  to  examine  the  Banks  as  they  could  not  show  the  required  reserve. " 

In  the  face  of  this  condition  of  affairs  eastern  bankers  and  financiers  opposed 
any  effort  to  increase  the  circulating  medium  of  the  nation. 

Our  eastern  banking  brethren   treat  with   supercillious,  and   caustic  airs 
politeness,  our  western  efforts  at  banking  and  our  views  on  finances.     But  I  tal 
pleasure   in  congratulating  you  bankers  of  the  Pacific  coast,   for  so   managii 
your  finances  and  forecasting  coming  events  that  it  has  not  to  be  said  of  y( 
that  the  government  had  to  come  to  the  rescue  to  prevent  a  general,  suspensic 
of  the  banks  under  your  care.     Your  banks  furnished  millions  of  money  to  helj 
your  eastern  brethren  through  the  crisis. 

There  eastern   banks  were  all  solvent.     Their  assets  were  greater  than  iheii 
liabilities,  but  they  did  not  have  circulating  medium  enough  for  themselves  ai 
for  the  legitimate  industries  of  their  localities, 

There  ivas  not  enough  money  to  go  around  by  hundreds  of  millions.  While 
the  people  had  the  money  the  banks  were  hard  up,  and  when  the  banks  got  it, 
then  the  people  were  hard  up.  And  now  that  the  banks  have  it  failures  are 
constantly  occurring  in  long  established  firms  for  want  of  more  money. 

The  cause  of  this  insufficient  supply  of  money  is 


VOLUME   OF   CURRENCY.  5 

GROWTH    OF   CIVILIZATION. 

The  world  has  been  progressing  in  civilization,  in  commerce,  industries  and  in 
business  with  wonderful  rapidity  during  the  past  century  and  especially  during 
the  past  fifty  years. 

Russia  has  broken  its  lethargy,  and  is  restless  with  energy.  Asia  has  thrown 
off  its  isolation  and  its  population  half  awakened  from  a  dream  of  a  thousand 
years  is  stretching  forth  its  hands.  India  is  contending  for  its  ancient  glory. 
Africa  is  showing  to  the  world  its  rich  fertile  soil,  its  rivers,  its  gold  and  dia- 
monds, and  treasures  for  commerce  and  agriculture.  All  South  America  is 
organizing  for  civilized  growth  and  work  with  its  wealth  of  soil  and  mines  to 
tempt  the  industry  of  man. 

The  islands  of  the  sea  from  the  almost  continent  of  Australia  to  the  little  islands 
are  becoming  active  struggling  centers  for  th^ir  part  of  commerce.  The  busi- 
ness area  of  the  United  States  in  less  than  a  century  has  spread  from  the  small 
territory  east  of  the  Alleghanies,  to  an  empire  extending  across,  a  continent 
from  some  3,000,000  to  6  ,000,000  people  now  scattered  over  3,400,000  square 
miles  and  overflowing  with  business,  energy  and  push,  eager  to  develop  £e 
resources  of  their  continent  and  prepare  it  for  the  habitation  of  the  coming 
hundreds  of  million.  The  whole  earth  is  rapidly  bting  prepared  for  the  com- 
fortable occupation  of  man. 

The  world  is  constantly  outgrowing  its  appliances  for  civilization.  The  circula- 
ting medium  of  exchange  is  no  exception  to  the  rule.  All  hitherto  adopted  forms 
of  money  have  been  outgrown  in  kind  and  in  volume. 

The  skins  of  wild  animals  at  an  early  age  were  the  money  of  exchange.  This 
jvas  outgrown  and  they  stored  the  skins,  cutting  off  the  ears  and  passing  them 
as  a  more  conveninent  form  of  money,  the  owner  being  entitled  at  any  time  to 
call  for  the  corresponding  pelts.  This  was  the  first  bank  of  deposit.  At  a  later 
Rge  stamped  pieces  of  leather  were  the  evidences  of  value,  gold  and  silver  not 
being  enough  in  volume.  The  Chinese  have  used  paper  money  for  thousands 
bf  years  past. 

Drafts,  certificates  of  deposits,  promisory  notes  and  orders  for  money  were 
used  by  the  ancients  to  increase  the  volume  of  the  medium  of  exchange. 

Because  we  do  not  know  what  others  have  done,  we  frequently  believe  that 
what  we  are  doing  or  propose  to  do  is  a  novelty  in  the  world . 

In  this  process  of  evolution  the  financiers  of  the  present  day  may  learn  two 
things.  First  that  money  is  a  compact  representative  form  of  values,  without  re- 
gard to  what  the  money  is  made  of  for  the  purpose  of  exchange. 

Second,  That  the  world  periodically  outgrows  both  the  kind  and  volume  of 
its  money. 

THE  WORLD'S  DEMAND  FOR  MONEY. 

As  a  result  of  this  outgrbwth  there  must  be  periodical  contractions  of  values 
from  a  scarcity  of  money.     That  is,  business  must  be  killed  off  until  it  is  reduced 
to  correspond  with  the  volume  of  money,  unless  the   volume  of   money   is   i 
creased  to  take  care  of  the  business.     The  volume  is  constantly  expanding   but 
not  as  rapidly  as  the  growth  of  the  world  requires. 


VOLUME  OF  CURRENCY. 


The  demand  is  far  in  excess  of  the  supply,  as  shown  by  the  following  calls  for 
loans. 

Austro-Hungary f  100,000,000. 

France, 182,000,000. 

Mexico, 40,000,000. 

Argentine  Republic 500,000,000. 

Other  South  American  States 725,000,000. 

African  mines.  Trust  Companys,  Etc 350,000,000. 

$1,897,000,000. 

Other  nations  want  as  much  more.  The  debt  of  the  nations  of  the  earth  was, 
in  1889,  over  $28,000,000,000. 

The  volume  of  business  in  the  United  States  alone  last  year  is  computed  at 
some  $130,000,000,000,  while  the  business  of  exchange  of  the  whole  world  was 
many  times  that  amount.  You  see  from  this  the  work  put  upon  money  to  make 
exchange. 

The  value  of  gold  and  silver  in  the  United  States  is  about  $1,153,194,404.  Of 
this  $128,622,489  are  locked  up  in  bank  reserves.  The  sum  of  $652,905,727  are 
reserved  in  the  United  States  treasury;  another  $100,000,000  is  locked  up  as  state, 
county  and  city  taxes,  leaving  the  small  sum  of  $272,666,188  in  coin  to  do  the 
work  of  the  nations'  business  of  $130,000,000,000 .  If  gold  alone  were  used> 
there  would  be  only  about  $200,000.000  in  circulation.  This  would  be  only  $3.50 
per  capita,  and  could  not  possibly  move  the  business  ot  the  nation.  Add  to  this 
gold  and  silver  the  paper  money  in  circulation  outside  of  the  treasury  and  bank 
reserves,  and  there  are  only  about  $900,000,000.  This  sum  fell  so  far  short  of 
being  able  to  do  the  work  that  the  December,  1890,  report  of  the  Comptroller  of 
Currency  shows  that  checks,  drafts,  certificates,  and  such  evidences  of  money, 
to  the  amount  of  over  92  per  cent  of  the  business,  were  used  in  1890,  aggregat- 
ing the  enormous  sum  of  $18,000,000,000,  in  banks  alone,  to  supplement  the  use  of 
our  legal  money.  Book  credits  and  notes  were  several  times  this  amount . 

This  eighteen  billions  was  the  worst  form  of  inflation .  Back  of  it  was  only 
personal  and  corporate  responsibility,  and  only  a  deciminal  of  a  cent  on  the  dol- 
lar in  lawful  money  to  meet  them. 

People  lost  confidence  in  this  vast  volume  of  checks,  drafts,  etc.,  and  then  the 
panic  came.  People  did  not  lose  confidence  in  the  legal  tenders  of  the  nation. 
This  was  accepted  on  sight,  and  a  demand  existed  for  millions  more.  Confi- 
dence was  not  lost  in  the  lands,  and  cities,  and  industries  of  the  people.  It  does 
seem  to  me  that  financiers  who  talk  against  government  paper  money  should,  in 
view  of  these  facts,  forever  hold  their  peace.  If  tnere  had  been  in  circulation 
millions  more  of  United  States  paper  money  the  panic  would  never  have  been 
heard  of. 

A  GLUT  OF  $20,000,000  ! 

Another  evidence  of  the  insufficiency  of  the  money  supply  is  the  condition  Oj 
the  New  York  banks  at  this  date,  March,  1891.  They  claim  to  have  a  glut  of 
money — a  surplus  of  $20,000,000  over  the  required  legal  reserve.  This  is  the 
result  of  calling  in  loans  from  the  channels  of  trade.  It  is  not  money  returned 
voluntarily  by  the  ubers  of  money.  It  can  all  be  absorbed  in  a  day  by  the 
places  from  which  it  was  called  in. 


VOLUME   OF   CURRENCY.  I 

But  the  most  startling  fact  disclosed  by  this  boasted  glut,  is  that  there  is  not 
enough  money  in  all  these  banks  over  the  legal  reserve,  to  even  start  one  rail- 
road company.  The  best  railroad  enterprise  with  gilt  edge  security  would 
absorb  this  boasted  $20,000,000,  in  building  its  first  few  miles  of  track. 

On  December  igth,  1890,  the  secretary  called  a  report  from  all  national  banks 
in  the  United  States.  They  average  less  that  2  per  cent  above  the  legal  reserve. 
Which  leaves  in  the  whole  national  banking  system  of  the  United  States  only  about 
$50,000,000  for  use.  Of  this  sum  $30,000,000,  is  United  States  Treasury  money 
deposited  in  banks  to  help  them  make  the  December  showing,  and  to  relieve  the 
financial  change.  No  wonder  the  business  of  the  nation  is  paralyzed.  It  becomes 
apparent  from  these  results  obtained  from  official  reports,  that  the  banks  in  the 
United  States  dare  not  loan  any  money  on  time  loans  to  develop  or  maintain  the 
industries  and  business  of  the  people. 

CALL  LOANS 

Can  only  be  used  on  short  speculation.  What  business  man  in  the  United  States 
can  start  a  manufacturing  industry,  build  a  railroad,  plant  out  an  orchard,  or  raise 
a  crop  on  a  call  loan?  The  $50,000,000  surplus  in  the  United  States  or  the  $20, 
000,000  surplus  glut  in  the  New  York  banks,  is  only  so  because  the  banks  dare  not 
loan  it  except  on  call,  and  no  legitimate  industry  can  use  it  on  call.  A  loan  for  30, 
60  or  90  days  is  but  a  trifle  better  than  a  call  loan.  It  can  only  be  used  by  mer- 
chants and  traders  to  tide  over  while  collections  are  being  made,  or  for  stock 
speculation.  The  industries  and  productions  and  large  enterprises  of  the  people 
can  only  be  met  by  time  loans,  and  not  by  short  loans. 

The  alarming  fact  is  that  if  the  money  was  retuf  ned  to  the  United  States  Treas- 
ury that  belongs  there  by  law,  and  if  from  the  banks  also  was  returned  the  tax 
money  that  legally  belongs  in  the  public  vaults,  there  would  not  be  enough  cash  in 
the  banks  to  meet  the  required  reserve.  They  would  not  have  a  dollar  to  loan 
even  on  call,  but  would  have  to  force  in  millions  more  of  money  from  already 
cramped  enterprises. 

Nothing  but  the  cool  level  headed  sense  of  the  American  today  prevents  a 
run  on  the  banks  in  the  United  States.  If  it  gets  started  what  will  b«  the  results 
in  view  of  these  facts  ? 

In  the  trouble  of  the  Baring  Bros.  Lord  Salisbury  refused  to  give  the  govern- 
ment consent  to  allow  the  Bank  of  England  to  furnish  aid.  Thereupon  the 
Governor  (President;  of  the  bank  said  to  him,  "My  Lord,  I  am  instructed  to  tell 
you,  in  case  you  refuse,  that  unless  the  government  comes  to  the  rescue,  there  is 
hardly  a  bank  in  the  united  kingdom  thai  can  be  relied  upon  to  meet  the  demand  of 
its  creditors  twenty-four  hours  after  the  disaster  we  apprehend''  Lord  Salisbury 
jumped  from  his  chair  as  if  shot  and  at  once  consented  to  the  relief. 

The  banks  of  the  Uuited  States  are  in  a  condition  bearing  too  strong  an  anal- 
ogy to  the  above  incident.  Not  only  today  but  for  a  long  time  past  they  have  been 
powerless  to  carry  the  time  business  of  the  nation,  and  with  only  call  or  60  day 
loans  to  offer  it  became  a  mockery  to  those  wanting  to  use  money. 

No  wonder  the  people  say  kill  off  the  banks,  of  what  use  are  they.  And  too 
true,  of  what  use  are  they  except  to  keep  matters  from  being  worse. 

Yet  they  are  not  to  blame.  They  have  not  the  money  with  which  to  carry 
the  business.  It  is  not  in  the  country.  The  remedy  is  not  to  destroy  the  banks, 


8 


VOLUME  OP  CURRENCY. 


but  for  the  nation  to  furnish  enough  money  to  cany  on  the  business  of  the  grow 
ing  country. 

CALLING   IN    MONEY. 

Because  Russia  wanted  her  money  she  called  $80,000,000  from  the  Bank  of 
England;  and  she  needing  more  money  called  in  and  borrowed  over  $7oo,ooo,ooo. 
The  banks  in  the  United  States  needing  more  money  called  in  hundreds  of 
millions  of  dollars,  issued  $30,000,000  panic  certificates,  and  borrowed  of  the 
United  States  and  of  each  other  millions  more. 

THE    CRASH. 

Because  this  money  was  called  in  from  the  channels  of  use  and  trade  people 
could  not  make  payments  in  money.  The  result  was  a  crash  of  unheard  of 
extent. 


The  failures  reported 

Shrinkage  in  stock,  New  York 

Estimated  shrinkage  of  values  in  the  United  States  in   other 


property 


$190,000,000 
300,000,000 

10,000,000,000 


In  addition  to  this  the  business  enterprises  of  the  United  States  are  to  a  large 
extent  crippled  or  closed  down.  Over  160,000  are  out  of  employment  in  New 
York  city  alone. 

THE   SITUATION 

at  present  as  to  the  8055  banking  institutions  in   the  United   States,  national, 
state,  private  and  savings  is  as  follows: 

Due  depositors $4,603,844,157 

Total  cash  in  all  the  banks  at  same  date; 

Gold  coin 99,811,011 

Silver,  nickle,  etc., y.S,8i  1,478 

Paper  momey 349,694,405 


Total,  . 
Ten  cents  on  the  dollar  on  hand  to  pay  depositors  ! 


$478,316,694 


In  gold  only  about  2  cents,  or  in  gold  and  silver  about  3  cents  on  the  dollar. 

At  this  same  time  the  banks  had  loaned  out  to  the  people  $3,893,957,799. 
Among  62,000,000  people  scattered  over  3,400,000  square  miles  of  the  United 
States  were  only  $957,746,248  with  which  to  pay  this  loan  Only  about  25  cents 
on  the  dollar.  Most  of  this  money  was  in  the  hands  of  those  who  do  not  owe  the 
banks,  and  is  held  by  the  owners  to  run  their  current  expenses.  Probably  not 
10  cents  on  the  dollar  available  to  pay  banks.  Yet  the  wealth  of  the  people  is 
some  $71,000,000,000  in  property. 

THE  DEMAND. 


Some  idea  of  the  demand  for  money  may  be  had  from  the  fact  that  over  $10,- 
000,000  were  used  in  1890  to  start  new  banks  in  the  South;  as  much  more  in  the 


VOLUME   OF  CURRENCY.  9 

West.  The  cotton  crop  was  valued  at  1400,000,000.  Over  17,000  new  enterprises 
started  in  the  South  last  year,  embracing  every  variety  of  industry .  Over  32,800 
miles  of  railroad  were  built  the  last  four  years,  at  a  cost  of  $3,000,000,000.  New 
New  York  city  used  1300,000,000  in  new  buildings,  while  the  West  used  money 
by  the  millions  for  its  new  enterprises,  many  of  which  are  shut  down  for  want 
money. 

This  wonderful  growth  and  energy  is  not  to  be  condemned.  It  is  the  preparing 
of  this  continent  for  homes,  and  for  the  support  of  the  generations.  All  of  these 
aids  for  civilization  are  to  uplift  humanity  to  its  high  and  peerless  destiny. 

It  furnishes  labor,  food  and  clothing  for  the  poor ;  it  furnishes  use  for  raw 
material,  and  results  in  industry,  home  and  happiness  for  millions. 

The  principal  non-productive  use  of  money  in  the  United  States  is  stock  and 
other  speculations  growing  out  of  call  loans.  Were  this  stock  speculation  con- 
stitutionally destroyed,  as  California  destroyed  it,  and  its  operators  forced  to  em- 
bark in  some  legitimate  calling,  it  would  be  a  lasting  benefit  to  the  country. 

TO    PAY  LABOR. 

He  who  carries  on  any  farm,  orchard,  dairy,  manufacturing,  or  any  other  pro- 
ductive enterprise,  must  have  a  circulating  medium  with  which  to  do  it.  The 
owner  of  an  enterprise  cannot  pay  laborers  daily  in  portions  of  an  interest  in  the 
products. 

He  can  borrow  money  on  his  property,  and  in  this  way  produce,  and  sell,  and 
repay  the  principal  and  be  free  of  debt.  But  he  must  have  money  and  time. 

;VOLUMB   REQUIRED. 

This  question  cannot  be  accurately  determined,  but  we  are  not  therefore  to 
leave  it  wholly  undetermined.  Approximation  is  all  that  can  be  attained. 

Generally  the  volume  should  be  such  'that  the  United  States  treasury  could 
hold  a  safe  reserve  of  say  twenty-five  per  cent  of  the  volume  issued.  So,  also, 
that  the  banks  could  hold  a  twenty-five  per  cent  reserve  of  deposits,  and  also 
that  tax  money  could  go  into  its  legal  vaults.  An  estimate  might  be  added  for 
hoarding  and  loss  by  accident.  In  addition  to  the  above  reserves  there  should 
be  a  full  volume  in  circulation  among  the  people  for  the  business  of  the  nation- 
A  volume  such  that  time  loans  could  be  abundantly  supplied. 

More  specific  figures  would  be  suggested  by  the  following  statistics : 

State  and  National  banks  have  deposits 12,516,179,807. 

Take  this  as  the  volume  of  issue  and  we  have,  say : 

Twenty-five  per  cent  for  United  States  treasury 629,044,951. 

"     Bank  reserves 629,044,951. 

For  tax  money 114,072,288. 


Total  reserve $1,372,162,190. 

Taking  this  sum  from  the  proposed  volume  there  would  -be  left  $1,144,017,617. 

If  the  above  reserves  were  deducted  from  the  present  volume  of  $2,082,568,942 

it  would  leave  only  $710,406,734.     The  increase  for  active  circulation   under  the 


10 


OF   CURRENCY. 


proposed  volume  is  $433,610,883.  In  other  words,  the  country  would  hold  the 
last  amount  named  to  protect  business,  instead  of  the  present  paltry  $50,000,000. 
From  this  volume  the  business  requiring  time  loans  could  be  safely  supplied. 

This  is  not  an  experimental  volume.  It  would  represent  about  forty  dollars 
per  capita  for  our  population,  while  France  uses  from  forty-two  to  forty-four  dol- 
lars per  capita.  We  could  safely  use  a  larger  volume  than  France  does. 

NOT  ENOUGH    GOLD    AND    SILVER. 

The  gold  in  the  United  States  represents  only  .$694,869,680  or  $11  per  capita. 

The  annual  increase  is  about  25  cents  per  capita. 

The  total  amount  of  silver  is  about  $485,370,497  or  $8  per  capita.  The  annual 
increase  is  about  74  cents  per  individual.  Gold  and  silver  would  therefor  give 
only  $19  per  capita  and  about  85  cents  per  capita  annual  increase.  The  total 
volume  of  gold  and  silver  in  the  world  is  only  about  $5.75  per  capita  of  the  world's 
population. 

THE      SILVER    QUESTION. 

Free  coinage  of  silver  therefor  cannot  accomplish  the  desired  results.  The 
annual  increase  of  our  population  is  such  that  the  coinage  of  our  entire  national 
silver  product  would  only  give  $20  per  capita  for  our  increase.  It  will  in  no  man- 
ner relieve  the  standing  need. 

The  great  objection  to  free  coinage  is  that  our  annual  product  is  worth  in  the 
market  $46,000,000.  When  coined  it  represents  $64,000,000  or  $18,000,000  profit 
added  by  the  Government  agreeing  to  pay  that  difference  on  demand.  This 
makes  a  present  of  $18,000,000  annually  to  the  producers  of  silver. 

This  is  too  great  a  local  benefit  to  a  class  of  persons  for  this  to  be  adopted 
as  a  law,  and  it  is  wholly  inadequate  to  meet  the  demand. 


50  YEAR  2  PER  CENT.  BONDS. 

This  is  simply  a  scheme  to  aid  banks  at  the  expense  of  the  people,  and  seems 
to  have  had  its  origin  and  backing  in  the  secret  councils  of  those  who  wish  to 
monopolize  the  money  system  of  the  United  States. 

Look  at  it !  Its  advocates  say,  issue  these  bonds  and  sell  them,  and  redeem 
the  4  per  cent  bonds,  and  let  the  national  banks  buy  the  2  per  cent  bonds  as  a 
basis  of  circulation.  How  will  it  work  ?  Will  the  owner  of  4  per  cent  bonds 
exchange  even  for  2  per  cent  bonds  ?  Certainly  not.  Then  if  you  sell  the  2  per 
cent  bonds  at  par  and  pay  a  premium  on  the  4  per  cent  bonds  you  will  have  to 
pay  all  the  4  per  cent  ones  will  earn  up  to  maturity.  We  will  then  be  paying  6 
per  cent  instead  of  4  per  cent  as  now,  and  that  does  not  increase  our  circulating 
medium  a  dollar.  The  people  are  simply  saddled  with  more  interest. 

The  sale  of  2  per  cent  bonds  to  banks  as  a  basis  of  circulation  is  a  robbery  of 
the  people.  To  illustrate:  The  United  States  issues  say  $100,000  in  2  per  cent  bonds^ 
you  wishing  to  open  a  bank  take  $100,000  cash,  now  in  circulation,  and  pass  it  over 
to  the  United  States  for  the  $100,000  in  bonds.  Next,  you  hand  back  your  bonds,  as 
a  deposit,  to  the  United  States  and  get  back  your  $100,000  cash  for  a  bank  capital,  and 
for  fifty  years  the  tax  payers  through  the  government  pay  you  2  per  cent  per  year> 


VOLUME  OF  CURRENCY.  11 

$100,000  interest  on  the  bonds  for  doing  a  banking  business  on  your  original 
$100,000.  If  you  use  the  semi-annual  interest  to  buy  more  bonds,  so  as  to 
make  it  compound,  you  will  at  the  maturity  of  the  bonds  have  your  original 
$100,000  plus  $100,000  interest  plus  about  $70,895  bonds  bought  with  interest  on 
interest,  making  a  total  profit  of  $170,895  for  doing  business  on  your  own  money. 
But  during  this  fifty  years  your  original  $100,000  will  be  loaned  out  to  the  same 
tax  payers  who  are  paying  2  per  cent  inrerest  on  the  bonds  to  you.  This 
loaned  out  capital  will  bring  in  ruling  rates  which  by  the  scarcity  of  money 
will  be  high.  This  with  the  profits  arising  from  the  periodical  wrecking  of  the 
people  ought  to  satisfy  the  owners  of  money.  It  will,  however,  engender  the 
thought  among  the  masses  that  the  banks  should  be  killed  off.  Our  present 
banking  capital  is  some  $700,000,000.  At  the  end  of  fifty  years  operating  under 
this  bond  scheme  the  banks  would  own  their  capital  stock  $700,000,000  plus 
$1,196,265,000  interest  on  bonds,  plus  over  $3,000,000,000  interest  on  the  capital 
stock  for  fifty  years.  That  is  the  banks  will  own  all  the  money  in  the  United 
States  and  have  the  people  in  debt  to  them  nearly  $3,000,000,000.  You  perceive 
at  once  that  this  scheme  will  not  increase  our  circulating  medium. 

CLEARING   HOUSE   PLAN. 

Another  plan  is  embodied  in  a  proposed  national  clearing  house  system  to  be 
incorporated  under  an  Act  of  Congress,  by  which  a  confederation  of  banks  can 
put  up  approved  collateral  with  the  clearing  house  and  receive  clearing  house 
notes,  to  be  legal  tender,  the  combined  clearing  house  being  responsible  for 
redemption  in  case  the  individual  bank  fails  to  redeem.  This  system  is  put 
forth  by  a  prominent  eastern  banker  who  asserts  that  we  need  no  more  money. 
Yet  this  whole  scheme  is  to  increase  the  circulating  medium,  but  giving  the 
banks  a  monopoly  of  issuing  and  controlling  it.  Its  weak  point  is  in  placing  back 
of  our  currency  no  greater  responsibility  than  the  banks  and  their  property.  It 
also  gives  the  banks  the  right  to  obtain  money  without  interest  and  loan  it  on 
interest. 

Better  let  the  government  issue  the  money  with  the  resources  and  wealth  of 
the  whole  people  of  the  United  States,  valued  at  $7 1,000,000,000,  back  of  it  tor  re- 
demption. If  the  property  of  a  combination  of  banks  back  of  a  money  issue  is 
good,  then  the  wealth  of  the  nation  back  of  the  issue  is  better. 

As  a  nation  we  want  no  money  for  the  people  which  is  only  backed  by  the 
responsibility  of  a  small  part  of  the  people  having  absolute  control  of  it  for  selfish 
ends. 

The  circulating  medium  should  be  issued  by  authority  of  the  whole  population 
imd  should  be  backed  by  the  entire  wealth  ot  the  nation,  and  should  be  con- 
trolled for  the  common  benefit  of  all.  The  2  per  cent  bond  system — the  free  coinage 
system — the  national  bank  increased  issue  and  sub-treasury  plans  fail  because 
they  are  in  the  interest  of  localities  and  minorities.  If  temporarily  successful 
they  would  soon  be  destroyed  by  the  majority  as  unjust.  Justice  and  equity  to 
all  must  be  at  the  foundation  of  any  system  adopted  by  our  nation. 

A    NATIONAL   SYSTEM 

should  be  based  upon  a  constitutional  amendment  prescribing  what  shall  constitute 
our  circulating  medium,  fixing  its  volume,  establishing  one  standard  of  value  and 


12  VOLUME   OP   CURRENCY. 

vesting  in  Congress  authority  to  issue  such  money,  making  it  a  legal  tender  and 
backing  it  with  the  wealth,  power  and  resources  of  the  nation,  making  it  ex- 
changeable for  gold  at  par  at  any  time. 
An  amendment  worded  about  as  follows  would  cover  the  ground : 

CONSTITUTIONAL  AMENDNENT. 

ARTICLE  XVI.  SECTION  i.  A  National  Currency  Circulating  Medium  shall 
be  issued  to  the  amount  of  twenty  dollars  percapita,  as  shown  by  the  census  of 
1890  and  by  each  succeeding  census,  for  the  proper  redemption  of  which  when 
required,  the  resources,  the  property  and  the  faith  of  the  nation  are  pledged;  for 
which  redemption,  Congress,  by  a  two-thirdsvote  of  each  House,  may  provide  for 
the  collection  of  Government  revenues  and  taxes,  in  gold  or  silver  coin. 

SEC.  2.  Said  currency,  with  gold  and  silver  coin  of  the  United  States  of  present 
weight  and  fineness,  the  gold  dollar  being  the  standard  or  unit  of  values,  and 
such  notes  as  may  be  issued  in  lieu  of  gold  or  silver  coin  and  bullion,  held  ex- 
clusively for  the  redemption  thereof,  shall  constitute  the  only  legal  money  of 
these  United  States,  and  shall  be  received  at  par  in  satisfaction  of  all  obligations 
for  the  payment  of  money  within  the  jurisdiction  of  the  United  States.  Said  gold 
and  silver  coin  and  currency  shall  be  exchangeable  at  par  value. 

Sec.  3.  Congress  shall  have  power  to  enforce  this  Article  by  appropriate  legis- 
lation, but  shall  have  no  power  to  increase  or  decrease  said  issue ;  provided  that 
after  the  issue  of  1900,  Congress  may,  by  a  two-thirds  vote  of  each  House,  reduce 
the  rate  of  any  further  issue  per  capita  from  time  to  time. 

This  amendment,  underlying  our  national  system  of  finances  would  give  us  the 
best  foundation  and  safeguards  ever  yet  adopted  by  any  nation. 

The  volume  is  protected  against  inflation,  contraction  or  repudiation.  It 
represents  about  two  cents  on  the  dollar  of  our  national  wealth  of  some  3,400,000 
square  miles  of  land  and  national  wealth  of  $71,000,000,000.  This  is  in  legal  effect 
a  first  mortgage  given  by  the  nation  to  secure  redemption.  With  such  security 
the  national  currency  would  be  considered  gilt  edge  paper  in  any  market  in  the 
world.  It  would  be  received  with  greater  confidence  than  Bank  of  England  notes 

The  gold  dollar  is  today  the  standard  by  which  all  values  in  the  United 
States  are  rated  or  measured,  and  as  an  abstract  standard  of  values,  this  amend- 
ment removes  from  controversy  or  doubt  that  disturbing  element  by  fixing  the 
gold  dollar  as  the  standard  of  measure.  It  at  the  same  time  does  full  justice  to 
silver,  by  making  it  and  paper  money  a  legal  tender,  with  gold  at  the  par  value. 
In  this  way  the  whole  people  make  the  difference,  if  any,  between  the  market 
value  and  the  coined  value,  and  when  exchanged  for  gold,  repay  the  difference. 

This  amendment  would  protect  the  currency  against  the  dangers  of  the  John 
law,  or  Argentine  Republic  scheme,  and  from  the  dangers  that  beset  the  Conti" 
nental  money.  It  is  a  greater  safeguard  than  is  thrown  around  the  Bank  of 
England  notes. 

No  nation  can  place  back  of  its  issues  such  security  as  this  would  give  to 
American  money.  England  cannot  place  back  of  an  issue  the  resources  of 
Canada,  Australia,  India  or  her  African  possessions,  for  at  any  time  they  might 
leave  England  and  set  up  for  themselves,  leaving  only  the  little  island  to 
redeem  the  currency  issued.  France  and  Germany  are  to  small.  Russia  is  too 
insecure  in  her  form  of  government.  But  the  United  States  with  its  vast  area,  its 
peaceful  and  stable  form  of  government,  and  its  citizens,  each  an  owner  in  the 
currency,  is  in  position  to  issue  a  currency  that  would  be  received  at  once  by  any 
nation  as  a  medium  of  exchange — a  representative  of  gold  at  par. 


VOLUME   OP  CURRENCY.  3 

Such  a  legal  tender  note  is,  in  money  effect,  the  clearing  house  certificate  of 
the  nation,  backed  by  the  national  wealth,  good  in  any  clearing  house  in  the 
United  States,  instead  of  a  certificate  backed  by  any  number  of  banks,  and  only 
good  where  they  wish  to  accept  it  by  courtesy.  It  is  a  check  signed  by  authority 
of  the  people  of  the  United  States,  backed  by  over  $7 1,000,000,000  of  the  people's 
wealth,  good  at  any  counter  of  any  bank,  instead  of  an  individual's  check,  only 
good  at  his  own  bank  and  in  his  own  locality.  It  is  the  promissory  note  of  the 
nation,  secured  by  a  constitutional  mortgage  on  over  2,500,000,000  acres  of  land 
and  the  cities,  railroads  and  civilization  thereon,  payable  to  bearer  and  good 
from  any  debtor  to  any  creditor,  instead  of  the  private  note  of  a  citizen,  secured 
by  a  mortgage  on  a  few  acres  of  land,  and  only  good  at  a  discount  to  those  who 
wish  to  buy  it.  It  is  a  representative  of  value  for  exchange  purposes,  mutually 
agreed  upon  by  62,000,000  of  people  for  their  joint  benefit,  backed  by  their  con- 
stitutional bond  to  secure  redemption  when  required,  on  which  bond  the  people 
pay  no  interest. 

Such  a  currency  circulating  medium  possesses  all  the  elements  of  safety  offered 
in  all  other  proposed  systems  combined,  and  many  others  that  cannot  be  intro- 
duced into  any  other  system. 

Confidence  would  never  be  lost  in  this  medium,  for  the  amendment  would 
prevent  Congress  or  politicians  or  political  parties  from  disturbing  the  foundations, 
as  at  present 

AN    ACT   OF  CONGRESS 

to  put  this  in  operation  would  be  substantially  as  the  present  law  of  June  3,  1864. 
The  department,  of  the  controller  of  currency,  the  bureau  of  printing  and  en- 
graving would  remain  the  same. 

The  system  adopted  should  be  complete  in  itself,  it  should  be  as  broad  as  the 
United  States  in  its  effects,  it  should  be  planned  to  extend  through  the  centuries- 
While  by  one  department  it  gathered  in  the  money  annually  by  taxation  and 
revenues,  it  should  annually  return  the  money  to  the  people  equitably  in  all  parts 
of  the  nation,  seeking  to  collect  taxes  and  revenues  from  the  rich,  and  largely 
returning  it,  through  the  laboring  classes,  to  circulation. 
This  would  be  a  system,  whereas  it  is  now  chaos. 

PRESERVE  THE   NATIONAL   BANK   SYSTEM. 

A  bank  system  in  the  United  States  is  a  commercial  necessity.  Every  individ- 
ual cannot  erect  burglar  and  fire-proof  vaults  to  protect  his  money.  Neither 
could  he  employ  a  set  of  clerks  to  keep  his  accounts  and  financial  exchanges. 

The  banks  to-day  use  the  smallest  floor  space  on  which  the  business  could  be 
transacted,  and  also  have  their  working  force  reduced  to  the  lowest  number.  The 
work  could  not  be  done  by  the  government  with  any  less  floor  space,  or  with  any 
less  number  of  persons  than  are  at  present  employed. 

Nothing  could  be  gained  by  destroying  the  present  system,  with  all  its  organ- 
ized and  trained  forces,  and  replacing  it  with  any  government  scheme  for  com" 
mercial  banking  or  loaning. 

The  scope  and  flexibility  of  the  present  system  could  be  vastly  improved  by 
some  arrangement,  as  the  following : 

Allow  states,  counties  and  cities,  of  say  five  thousand  population  or  over* 
where  they  need  monev  for  public  improvements,  to  issue  2  per  _cent  bonds  for 
twenty  or  thirty  years  to  the  amount  of  5  per  cent  of  the  assessed  value  of  the 
real  estate,  Allow  the  United  States  to  buy  these  bonds,  prohibiting  any  contest 


14  VOLUME   OF   CURRENCY. 

as  to  their  validity  after  receipt  of  the  money  therefor.  Let  the  Treasurer  sell 
these  bonds  to  any  national  bank  wishing  to  purchase  them,  and  allow  them  or 
any  United  States  bonds  to  be  used  as  a  deposit  security  with  the  United  States 
Treasury  on  which  to  draw  money  when  additional  sums  are  required  by  the 
bank.  The  large  reserve  always  held  by  the  United  States  Treasury  would  be 
the  fund  from  which  this  would  be  drawn,  and  to  which  this  would  be  returned 
when  not  needed.  This  would  give  a  perfect  elastic  currency  to  meet  all  contrac- 
ions  and  expansions  of  season  trade.  Real  estate  could  also  be  safely  used  as  a 
reserve,  as  shown  under  the  head  of  Farmers'  Alliance  Scheme  hereafter. 

The  economies  of  this  plan  are  that  states,  counties  and  cities  wanting  to  bor- 
row money  and  pay  interest  could  borrow  of  the  people  who  have  the  national 
money  to  loan,  and  banks  could  buy  such  bonds  to  use  in  their  system. 

Our  system  of  national  finances  should  be  so  arranged  that  the  renewed  sup  - 
plies  of  money  seeking  loans  in  the  hands  of  one  class  of  people  could  be  ob- 
tained by  that  other  class  requiring  the  use  of  money.  This  can  best  be  done  by 
our  government,  which  is  over  62,000,000  of  people,  issuing  a  full  volume  of  gold* 
silver  and  currency,  which  is  the  property  of  all  the  people,  to  be  used  by  them 
as  a  representative  basis  of  values  for  exchange. 

A  large  reserve  held  idle  in  its  vaults  by  the  government  is  for  the  benefit  of  the 
people,  lo  be  sent  at  one  time  (like  a  reserve  force  of  an  army)  to  the  support  of 
this  place,  and  then  to  other  places.  This  reserve  system  will  meet  all  demands 
for  an  elastic  currency. 

The  people,  through  the  government  issuing  and  holding  this  medium  of  ex- 
change for  their  own  use  and  benefit,  share  its  profits  and  losses  for  the  commun- 
ity as  a  whole. 

The  only  remaining  point  is  to  provide  a  proper  means  by  which  the  people 
may  obtain  the  use  of  this  money  as  needed. 

This  must 'be  done  by  banking  principles,  either  by  the  government  or  by 
banks. 

If  the  government  attempts  this  work  it  will  require  as  much  floor  space  as  th 
banks  now  use,  and  as  many  and  as  able  employees  as  are  now  engaged  by  all 
the  banks. 

That  a  profit  may  arise,  the  banks  are  now  run  on  the  most  economical  basis 
possible,  and  the  government  could  not  therefore  improve  on  the  present  bank 

system. 

FARMERS'  ALLIANCE  SCHEME. 

This  scheme  has  some  sound  points  in  it.  Land  can  be  safely  used  as  a  secur- 
ity in  the  national  bank  system  as  well  as  bonds.  Allowing  the  title  to  land  at  a 
valuation  of,  say,  its  averaged  assessed  value  for  the  preceeding  five  years,  and 
not  to  exceed  one-half  of  its  cash  value,  to  be  pledged  to  the  government  under 
the  form  of  a  national  bank  incorporation,  would  give  relief  to  the  farming  com 
munities. 

It  would  substitute  a  national  bank  for  a  sub-treasury  ;  a  set  of  bank  officers 
elected  by  the  farmers  for  their  banks  to  manage  the  loans  for  a  set  of  sub-treas- 
ury agents  ;  a  responsibility  to  the  government  for  large  aggregate  sums  under 
the  bank  laws,  instead  of  the  inspection  of  thousands  of  small  changing  loans. 
The  supervision  of  the  Bank  Examiners  under  present  laws  as  to  the  solvency  of 
the  bank  would  be  all  that  was  required,  while  the  bank  officers  would  supervise 
pll  detail  business  and  loans  to  individuals. 

Provide  also  for  the  first  $100,000  drawn  as  above,  the  interest  to  the  nation 


VOLUME   OF   CURRENCY.  15 

snan  De  2  per  cent.  The  rate  increasing  on  larger  sums  as  follows  :  3  per  cent. 
4  per  cent,  5  per  cent,  6  per  cent,  7  per  cent,  8  per  cent,  9  per  cent,  10  per  cent,  on 
each  additional  $100,000. 

The  object  of  this  is  to  prevent  reckless  drawing  and  using  at  low  rates. 

The  lower  rates  will  develope  the  legitimate  industries  of  the  country.  The 
higher  rates  will  check  the  wild,  rash  enterprises  of  speculation,  and  furnish  means 
to  carry  on  business  with  less  profit  or  loss  until  adjustments  occassion  regular 
business  routine. 

This  is  the  same  principle  applied  the  world  over  in  finances.     The  Bank  o 
England  raised  its  rate  of  discount.     So  did  other  European  financial  institutions; 
The  same  thing  was  done  in  New  York  recently.     It  is  the   natural  law  on  the 
subject  for  checking. speculation  without  killing  off  legitimate  business. 

This  plan  is  adopted  in  the  recent  German  law  establishing  a  system  of  more 
liberal  and  modern  financiering. 

The  London  Times  says:  "The  whole  monetary  system  of  the  United  States 
is  in  a  muddle.  This  condition  is  due  to  piece-meal  legislation." 

The  shattered  fragments  of  our  laws  from  1790  to  this  date  should  be  repealed 
by  a  uniform  system  competent  to  handle  our  finances. 

The  national  banks  should  be  retained,  but  should  be  unfettered,  so  that  they 
could  do  the  most  good. 

POLITICAL   FORECAST. 

Next  to  personal  rights,  no  question  affects  the  voter  more  sensitively  than  the 
rights  of  property. 

One  of  the  most  important  of  these  is  the  increase  in  the  volume  of  money. 

The  political  party  that  offers  a  safe  increase  in  currency  to  relieve  the  wants 
of  the  people,  and  carry  on  the  business  of  the  nation  will  be  offering  a  premium 
for  every  vote.  An  increase  of  $20.  per  capita  for  62,000,000  population  is  an 
increase  of  over  fioo  per  voter. 

The  laboring  classes  and  those  borrowing  money,  with  this  as  a  leading  issue, 
would  vote  in  overwhelming  majorities  for  such  a  measure  in  utter  disregard  of 
present  party  lines . 

It  certainly  will  be  made  an  issue,  unless  one  of  the  dominant  parties  shall 
pass  such  a  law  at  the  next  Congress. 

If  the  Democrats  propose  such  legislation  and  the  Republicans  resist  it,  the 
next  campaign  and  Congress  will  be  overwhelmingly  Democratic.  Should 
the  Republicans  propose  the  law  and  the  other  party  oppose  it,  the  results  will 
be  in  favor  of  the  Republican  party. 

But  if  the  present  parties  in  Congress  show  the  people  how  "not  to  do  it"  by 
wasting  the  time  in  discussing  insufficient,  sham  and  subterfuge  plans,  to  deceive 
the  people,  they  will  find  the  voters  not  in  the  least  shaken  in  their  firm  purpose. 

The  most  critical  period  in  the  history  of  present  political  parties  that  has 
arisen  since  the  war  will  occur  in  the  next  session  of  Congress,  and  on  this  ques- 
tion of  the  increased  volume  of  money, 

The  system  of  money  adopted  by  Congress  must  be  just  to  all  the  people  of 
the  United  States.  The  power  and  authority  for  the  money  has  its  origin  in  the 
people,  and  must  be  so  planned  as  to  be  with  them  a  co-oporating  power  for  the 
common  good. 

The  homes  and  property  of  the  masses  today  are  in  jeopardy  by  reason  of  the 
insufficient  supply  of  money.  The  industries  of  the  nation  are  seriously  crip- 
pled, the  further  development  of  our  productive  areas  are  brought  largely  to  a 


16  VOLUME  OP  CURRENCY. 

standstill,  the  laboring  classes  by  the  hundreds  of  thousands  are  out  of  employ- 
ment because  employers  can  not  get  the  money  with  which  to  pay  for  daily 
labor. 

We  have  a  nation  of  62,000,000  people,  an  area  of  3,400,000  square  miles 
of  the  richest  land  in  the  world,  a  national  wealth  of  $71,000,000,000.  An 
annual  volume  of  business  of  $130,000,000,000.  An  intensely  active,  energetic 
people;  government  annual  expenses  of  over  $1,000,000,000,  and  only  $2,082,- 
568,924  as  a  circulating  medium  with  which  to  conduct  all  this  business.  This  is 
3  cents  on  the  dollar  for  over  national  wealth,  and  \%  cents  on  the  dollar  for 
our  volume  of  business.  But  if  you  deduct  from  the  present  volume,  the  bank, 
the  United  States  Treasury,  state  and  city  tax  reserves,  there  will  be  left  for 
active  business  work,  i  cent  on  the  dollar  of  our  national  wealth  ;  y*  cent  on 
the  dollar  for  our  volume  of  business.  If  you  still  further  confine  the  money  to 
gold  and  silver  it  gives  for  active  work  about  ^  cent  on  our  national  wealth, 
and  about  y&  cent  per  dollar  for  our  volume  of  business. 

It  lies  in  the  power  of  Congress  to  make  this  the  banking  nation  of  the  world. 
But  to  do  this  our  volume  of  money  must  be  so  increased  that  we  have  ample 
reserves  at  the  proper  places,  and  a  free  volume  of  money  for  our  use  and  to 
spare  in  loans  to  other  nations. 

Today  we  are  tributary  financially  to  foreign  nations.  Over  $50,000,000  per 
year  is  paid  out  as  interest  and  profit  to  foreigners  for  the  use  of  their  money,  of 
which  over  $1,500,000,000  is  in  use  in  the  United  States.  Our  own  money  is  not 
enough  so  long  as  we  are  compelled  to  get  this  foreign  aid.  The  financiers  of 
other  nations  are  calling  in  all  the  gold  they  can  get.  France,  Germany,  Russia, 
Austria-Hungary,  England,  the  South  American  nations  and  others  are  striving 
each  to  increase  its  volume  of  gold  reserves. 

England  is  critically  suffering  in  the  contest  and  our  own  financiers  forecast  a 
heavy  drain  on  our  gold  to  meet  the  balance  of  trade  this  year.  It  is  in  view  ofv 
such  facts  as  I  have  cited  in  this  address  that  Secretary  Windom  said  in  his  last 
speech  of  an  increase  in  our  money  these  warning  words,  "Could  such  a  medium 
be  secured,  the  grave  commercial  disaster  which  threatens  our  future  might  be 
averted,  had  it  not  been  for  the  peculiar  conditions  which  enabled  the  United 
States  Treasury  to  disburse  over  $75,000,000  in  two  and  a  half  months  last  fall 
the  stringency  would  have  resulted  in  wide-spread  financial  ruin." 

Senator  Sherman  said  in  his  recent  speech,  "I  believe  a  majority  of  the  Senate 
desire,  first,  to  provide  an  increase  of  money  to  meet  the  increasing  wants  of 
our  rapidly  growing  country  and  population,  and  to  supply  the  reduction  in  our 
circulation  caused  by  the  retiring  of  national  bank  notes." 

Senator  Sherman  said  recently  in  a  letter  to  me  on  this  subject,  "I  will  do  all 
in  my  power  to  secure  the  very  best  possible  financial  legislation  by  Congress." 

CONSTITUTIONAL   DANGER. 

One  of  the  greatest  dangers  in  our  present  law  is  the  doubt  as  to  the  consti- 
tutional power  of  Congress  to  make  paper  money  a  le^al  tender.  The  United 
States  Supreme  Court  first  decided  by  five  Justices  to  three  that  Congress  had 
no  power  to  make  paper  money  a  legal  tender,  Chief  Justice  Chase  rendering 
the  opinion. 

One  of  the  five  resigned,  Congress  increased  the  number  of  Justices  from 
eight  to  nine;  the  two  vacancies  were  filled  by  men  who  joining  the  opinion  of 
the  minority  held  that  as  a  war  measure  Congress  had  power  to  make  paper 
money  a  legal  tender. 


VOLMME   OP  CURRENCY.  17 

This  decision  stood  five  Justices  to  four.  Three  more  of  the  four  have  died, 
and  their  places  have  been  filled  by  those  who  believe  in  this  power,  and 
in  its  latest  decision  our  United  States  Supreme  Court  holds  by  eight  to 
one  that  Congress  can  make  any  thing,  in  any  quantity,  a  legal  tender.  In 
other  words,  the  doors  are  thrown  wide  open  to  inflation  of  the  worst  form. 
Even  now,  are  proposed  measures  that  have  no  limit  to  currency  issue.  A 
future  administration  and  Supreme  Court  could  over  rule  the  above  decision  and 
hold  that  the  whole  currency  issued  was  unconstitutional  and  void,  and  was  not 
even  a  claim  against  the  nation. 

Three  dangers  are  at  the  very  root  of  our  financial  laws,  ruinous  inflation,  con- 
stitutional repudiation  and  a  threatened  change  of  the  gold  dollar  as  the  measure 
of  values. 

A  safe  monetary  system  is  one  of  the  essential  elements  of  the  prosperity  of 
this  nation.  It  must  stand  before  the  people  of  this  and  other  nations,  founded 
upon,  and  guarded  by  constitutional  power,  protecting  it  from  the  dangers  of 
inflation,  contraction,  repudiation,  or  change  of  the  standard  of  values,  and 
pledging  the  faith,  and  resources  of  the  nation  as  the  power  and  will  of  the 
nation  to  exchange  gold,  silver  and  currency  at  par  on  demand. 

With  such  a  circulating  medium  sufficient  in  volume  to  meet  the  present  and 
growing  wants  of  the  nation,  wisely  administered  by  act  of  Congress,  for  the 
benefit  of  the  people,  we  would  enter  upon  a  period  of  prosperity,  development 
and  safety  never  heretofore  attained,  one  in  which  financial  storms  would  seldom 
occur  and  which  could  be  safely  handled  from  the  great  reserve  that  should  lie 
idle  in  the  United  States  Treasury  to  meet  local  demands,  here  at  one  time,  there 
at  another. 

This  legislation  is  possible  and  probable. 

Congress  and  the  people  are  discussing  and  investigating  and  seeking  for  the 
best  method.  Notwithstanding  all  that  is  said  to  the  contrary,  honesty  in  the 
minds  of  our  Congressmen  on  this  subject  is  the  uppermost  thought.  But  they 
look  to  the  bankers  and  financiers  for  facts  and  suggestions  and  knowledge.  If 
they  shall  receive  it,  they  will  act  upon  it. 

With  these  facts  and  views  before  me  I  present  the  resolution  on  this  subject 
as  expressive  of  the  views  of  the   Bankers  of  this  Convention  on  the  subject. 
As  such  it  will  meet  with  a  warm  and  welcome  reception  from  our  legislators  ii. 
Congress,  and  will  be  carefully  considered  by  them  in  molding  the  financial  law 
of  the  nation. 


AS   GOOD  AS  GOLD! 


A  National   Currency 


ISSUED  BY  AUTHORITY  OF  THE  PEOPLE;  BACKED  BY  THE  WEALTH 
OF  THE  NATION;  BASED  ON 


A    CONSTITUTIONAL   AMENDMENT. 


AND   CIRCULATED   FOR   THE   BENEFIT  OF   THE   PEOPLE;    UNDER 


A  NATIONAL    MONEY  SYSTEM 


IN    AMPLE   VOLUME    FOR   THE   BUSINESS   OF  OUR    GROWING   CIVILIZATION. 


AN    ADDRESS 

BEFORE  THE  COMMERCIAL  CONGRESS  AT  KANSAS  CITY,  APRIL  16,  1891, 
BY  R.  M.  WIDNEY,  LL.  D.  PRESIDENT 

OF   THE    UNIVERSITY  BANK  OF    LOS  ANGELES,  CALIFORNIA 


LOS  ANGELES: 

TIMKS-MIRROR  PKINTINQ  AND  BINDING  HOUSE. 
1891. 


Either  our  circulating  medium   must  be   increased  suf- 
ficiently to  meet  the  'wants  of  our  growing  country,  or  the 
business  of  the  country  must  be  killed  off  until  it  is  ivithin 
the  compass  of  our  present  circulation* 


The  following  resolution  received  the  unanimous  vote  of  the  California 
Bankers'  Association  at  Los  Angeles,  March  13,  1891 : 

Resolved,  That  this  convention  respectfully  request  Congress  at  its  next 
session  to  devise  a  uniform  money  system  for  the  people  of  the  United  States, 
with  the  gold  dollar  as  the  standard  or  unit  of  value;  using  gold,  silver  and  cur- 
rency for  a  circulating  medium,  in  a  sufficient  volume  to  fully  meet  and  keep  pace 
with  the  growing  wants  of  the  business  of  the  country ;  founding  the  issue  of  cur- 
rency upon  the  wealth  of  the  whole  nation  ;  making  gold,  silver  and  currency  a 
legal  tender,  and  exchangeable  at  par  on  demand,  and  fixing  by  a  constitutional 
amendment  the  legality  of  such  a  circulating  medium,  and  preventing  the  dangers 
of  inflation,  contraction,  repudiation,  or  change  in  the  standard  of  value. 


The  most  critical  period  in  the  history  of  the  present 
political  parties  that  has  arisen  since  the  ivar  will  occur  in 
the  next  session  of  Congress,  and  on  this  question  of  in- 
creased volume  of  money. 


AS  GOOD  AS  GOLD. 


Judge  R.  M.  "\VIDXEY,  President  of  the  University  Bank,  delegate  from 
Xios  Angeles,  Cal.,  addressed  the  Commercial  Congress,  at  Kansas  City, 
March  16,  1891  as  follows: 


Mr.  President  and  Gentlemen  of  this  Congress. 

The  owners  of  money  naturally  do  not  want  the  volume  increased. 
While  it  is  limited  they  can  control  the  rate  of  interest,  and  the  value  of 
all  labor  and  products,  and  can  dictate  the  price  of  all  property. 

A    CORNER    ON   MONEY. 

A  corner  on  railroad  rates  is  dangerous,  so  is  a  corner  on  wheat,  or  corn, 
or  cotton,  sugar,  wool,  or  on  any  of  the  staple  products.  But  of  all 
dangers  a  corner  on  money  is  the  worst.  A  oorner  on  money  is  a  corner 
on  all  other  corners  combined,  and  can  control  the  social  and  political,  as 
well  as  the  producing,  labor  and  property  interests  of  the  nation.  The 
Rothschilds  recently  attempted  a  money  corner  on  Russia  to  control  its 
internal  policy  against  the  Jews.  Russia  in  retaliation  is  attempting  a 
corner  on  gold,  and  it  spreads  dismay  and  panic  among  the  nations. 

It  is  claimed  that  by  two  or  three  men  combining  in  New  York  they 
can  lock  up  enough  money  to  close  all  the  banks  in  that  city.  The  volume 
of  money  and  the  national  system  for  its  circulation  should  be  such  that 
no  corner  on  money  can  ever  be  possible. 

A   POLITICAL    FORECAST. 

The  most  critical  period  in  the  history  of  present  political  parties  that 
has  arisen  since  the  war  will  occur  in  the  next  session  of  Congress,  and 
on  this  question  of  the  increased  volume  of  money. 

Next  to  personal  rights,  no  question  affects  the  voter  more  sensitively 
than  the  rights  of  property,  and  of  these  an  increase  in  the  volume  of 
money  is  most  important. 

The  political  party  that  offers  a  safe  increase  in  currency  to  relieve  the 
wants  of  the  people,  and  to  cany  on  the  business  of  the  nation  will  be 
offering  a  premium  for  every  vote.  An  increase  of  $20  per  capita  on  a 
population  of  62,000,000,  is  a  bid  of  about  $100  per  vote. 

The  laboring  classes  and  those  borrowing  money  constitute  about  nine- 
tenths  of  the  voters,  and  with  this  as  a  leading  issue  they  would  vote  in  over- 
whelming majorities  for  such  a  measure  in  utter  disregard  of  present 
party  lines.  It  will  certainly  be  made  an  issue,  unless  one  of  the 
dominant  parties  shall  pass  such  a  law  at  the  next  session  of  Congress. 


If  the  Democrats  propose  such  legislation  and  the  Republicans  resist, 
it,  the  next  campaign  and  Congress  will  be  overwhelmingly  Democratic^ 
should  the  Republicans  propose  the  law  and  the  other  party  oppose  it,  the 
results  will  be  in  favor  of  the  Republican  party. 

But  if  the  present  parties  show  the  people  "how  not  to  do  it,"  by  wasting 
the  time  in  discussing  insufficient,  sham  and  subterfuge  plans,  to  deceive 
the  people,  they  will  certainly  pay  the  penalty  of  utter  political  defeat. 

The  homes  and  property  of  the  masses,  today,  are  in  jeapardy  by 
reason  of  an  insufficient  volume  of  money.  Nine  million  homes  mortgaged 
at  a  high  rate  of  interest,  annually  eating  up  the  home;  means  nine 
million  solid  votes  for  more  money 

In  addition  to  this  the  industries  of  the  nation  are  seriously  crippled;, 
the  further  developments  of  our  productive  areas  are  brought  largely  to  a. 
stand  still;  the  laboring  classes  are  out  of  employment  by  the  hundreds 
of  thousands  because  employers  can  not  get  the  money  with  which  to  pay 
for  daily  labor. 

THE  STRINGENCY  OF  MONEY 

that  prevails  over  the  United  States,  and  recently  bordered  on  a  panic,, 
extends  to  England,  Germany,  France,  Russia,  and  in  fact  to  all  the  Europ- 
ean nations,  and  to  South  America.  For  want  of  money  long  established 
mercantile,  manufacturing,  commercial  and  financial  institutions,  noted 
for  decades  of  careful,  safe  business  management,  went  down  like  grain, 
before  the  reaper.  They  went  down  for  want  of  money.  There  was  not 
enough  money  to  go  around  by  hundreds  of  millions  of  dollars.  When 
the  people  had  it  the  banks  were  hard  up,  and  when  the  banks  had  it  the 
people  were  short. 

THE  CRASH  CAME  FOR  WANT  OF  MORE  MONEY. 

The  failures  of  1890  were $  190,000,000 

Shrinkage  of  New  York  stocks  and  bonds 600,000,000 

Shrinkage  of  values  in  United  States 10,000,000,000 

The  banks  called  in  over 100,000,000 

The  United  States  Treasury  paid  out  over 200,000,000 

Tho  banks  issued  panic  certificates \ 30,000,000 

The  U.  S.  Treasury  deposited  with  banks  to  help  tide  over 30,047.118 


Total $11,150,047,118 

Millions  were  shipped  from  England  and  California  to  fill  up  the  want 
of  more  money.  After  all  this  effort  to  overcome  the  stringency  a  national 
bank  examiner  told  me  last  December  that  they  did  not  dare  to  examine 
the  banks,  as  they  could  not  show  the  required  reserve.  They  were  sol- 
vent in  assets,  but  could  not  command  ready  money.  A  few  hundred 
more  millions  of  legal  tender  paper  money  in  circulation  would  have- 
avoided  the  crash. 


THE  FINANCIAL  SITUATION 

'Of  the  8,050  banking  institutions  in  the  United  States,  State,  National, 
private  and  savings,  was  last  December,  as  shown  by  the  official  reports, 
-as  follows: 

Due  depositors $4,603,844,157 

Cash  in  these  banks  to  meet  above  deposits: 

Gold  coin $    99,811,011 

Silver 28,811,478 

Paper  money 349,694,405 

$478,316,694 

That  is,  the  banks  had  ten  cents  on  the  dollar  to  pay  depositors.  In 
gold  they  had  only  about  two  per  cent;  in  gold  and  silver  less  than  three 
per  cent.  At  the  same  time  the  banks  had  loaned  out  $3,893,957,799  among 
62,000,000  people  scattered  over  an  area  of  3,400,000  square  miles  of  terri- 
tory. There  were  at  the  same  date  $957,746,248  in  the  hands  of  the 
people  with  which  to  pay  the  banks.  In  fact,  after  deducting  state,  city, 
county  and  other  public  funds,  there  was  not  10  cents  on  the  dollar  in 
the  hands  of  the  borrowers  to  make  payment  with.  Yet  the  wealth  of 
the  people  was  over  $71,000,000,000.  The  people  were  solvent  in  property 
twenty-fold,  but  could  not  command  available  cash.  It  was  not  in  the 
country,  as  shown  by  the  above  figures. 

The  volume  of  money  in  the  country  could  not  sustain  the  volume  of 
business,  and  over  $11,000,000,000,  one-seventh  of  the  entire  nation's 
wealth,  was  killed  off  in  the  short  space  of  a  few  months  for  want  of  a  few 
hundred  millions  more  of  money. 

THE  STRINGENCY  IS  MORE  APPARENT 

from  other  statistics.  The  volume  of  business  in  the  United  States  last 
year  was  ove-  $130,000,000,000.  After  deducting  from  the  total  volume  of 
money  in  the  United  States,  reserves  of  banks,  and  United  States  Treas- 
ury, and  State,  county,  city  tax  money,  and  other  public  funds,  there 
would  not  be  left  in  circulation  to  exceed  $700,000,000,  or  about  one-half 
of  a  cent  on  the  dollar  of  the  volume  of  business  with  which  to  do  the 
work. 

If  gold  and  silver  alone  were  used  it  would  only  be  about  one-eighth  of 
a  cent.  If  all  the  silver  mined  in  the  United  States  were  added  it  would 
give  less  than  one-quarter  of  a  cent  on  the  dollar  of  the  volume  of  busin 

The  volume  of  actual  money  fell  so  far  short  of  being  able  to  do  the 
work  that  the  commercial  world  was  forced  to  use  92  to  9  per  cent  in 
checks,  drafts,  certificates,  and  such  evidence  of  money  (as  shown  by  the 
Comptroller's  report  for  December,  1890.)  This  represented  some  $123,- 
000,000,000  of  such  paper  used  for  business.  This  was  the  worst  form  of 
inflation.  Back  of  it  was  only  the  shifting  and  personal  responsibility  of 
individuals,  firms  and  corporations,  and  a  fraction  of  a  cent  on  the  dollar. 
People  lost  confidence  in  this  vast  volume  of  checks,  drafts  and  paper  evi- 
dence of  money.  The  money  was  not  in  existence  in  volume  enough  to 


sustain  it.  The  same  relation  exists  between  the  volume  of  money  in  the^ 
country  and  the  credit  used,  as  between  a  bank  reserve  and  its  deposits. 
The  volume  of  the  money  must  increase  as  the  credit  increases.  The  people 
are  paying  in  interest  and  profit  to  foreigners  over  $50,000,000  per  year, 
for  the  use  of  their  money,  to  increase  our  volume,  to  do  our  business.  If 
the  people  through  the  government  issue  their  own  circulating  medium, 
they  will  pay  this  $50,000,000  annual  interest  to  themselves.  Why  should 
we  be  in  financial  bondage  to  foreigners  and  work  for  them  when  we  can 
make  our  own  money,  and  use  it  for  the  same  purpose,  and  save  this  an- 
nual $50,000,000?  We  are  now  paying  this  tribute  to  foreign  capitalists, 
because  we  have  not  enough  of  our  own.  Why  should  we  pay  this  interest 
to  others,  when  as  a  nation  we  have  the  resources  to  issue  our  own  volume 
of  money. 

A  GLUT  or  $20,000,000! 

Another  evidence  of  the  insufficiency  of  the  monev  supply  is  the  condi- 
tion of  the  New  York  banks  in  March,  1891.  They  claim  to  have  a  glut 
of  money — a  surplus  of  $20,000,000  over  the  required  legal  reserve.  This 
is  the  result  of  calling  in  loans  from  the  channels  of  trade.  It  is  not 
money  returned  voluntarily  by  the  users  of  money.  It  can  all  be  absorbed 
in  a  day  by  the  places  from  which  it  was  called  in. 

But  the  most  startling  fact  disclosed  by  this  boasted  glut,  is  that  there 
is  not  enough  money  in  all  these  banks  over  the  legal  reserve,  to  even 
start  one  railroad  company.  The  best  railroad  enterprise  with  gilt  edge 
security  would  absorb  this  boasted  $20,000,000,  in  building  its  first  few 
miles  of  track. 

On  December  19th,  1890,  the  secretary  called  a  report  from  all  national 
banks  in  the  United  States.  They  average  less  than  2  per  cent  above  a 
25  per  cent  reserve.  Which  leaves  in  the  whole  national  banking  system 
of  the  United  States  only  about  $50,000,000  for  use.  Of  this  sum  130,000- 
000,  is  United  States  Treasury  money  deposited  in  the  banks  to  help  them 
make  the  December  showing  and  to  relieve  the  finaocial  danger.  On  April 
llth  this  surplus  has  fallen  to  $5,600,000.  No  wonder  the  business  of  the 
nation  is  paralyzed.  It  becomes  apparent  from  these  results  obtained 
from  official  reports,  that  the  banks  in  the  United  States  dare  not  loan  any 
money  on  time  loans  to  develop  or  maintain  the  industries  and  business 
of  the  people. 

THE   FINANCIAL    VACUUM 

thus  briefly  pictured  to  you,  called  a  money  stringency,  means  only  one 
thing.  An  insufficient  supply  of  money.  Of  this  Secretary  Windom  said 
in  his  last  address  in  New  York:  "  had  it  not  been  for  the  peculiar  condi- 
tions which  enabled  the  United  States  Treasury  to  disburse  over  $75,000,- 
000  in  two  and  one-half  months,  last  fall,  the  stringency  would  have  re- 
sulted in  wide-spread  financial  ruin."  The  market  was  not  just  then  cry- 
ing for  more  of  that  95  per  cent  of  checks,  drafts,  panic  certificates,  or 
other  evidences  of  money.  It  wanted  the  money  and  had  to  have  either 
the  money  or  "  the  wide  spread  financial  ruin.'' 


THE    DEMAND. 

You  have  seen  the  negative  side  of  the  question,  the  want  of  money. 
Now  take  the  other  half  of  the  picture  and  look  at  the  affirmative  demand 
for  money.  Over  $10,000,000  were  used  in  1890  to  start  new  banks  in  the 
South  alone  as  much  more  in  the  West.  The  cotton  crop  was  valued  at 
$400,000,000.  Over  17,000  new  enterprises  started  in  the  South  last  year, 
embracing  every  variety  of  industry.  Over  32.800  miles  of  railroad  were 
built  the  last  four  years,  at  a  cost  of  $3,000,000,000,  New  York  city  used 
$300,000,000  in  new  buildings,  while  the  West  used  money  by  the  millions 
for  its  new  enterprises,  many  of  which  are  shut  down  for  want  of  money. 

This  wonderful  growth  and  energy  is  not  to  be  condemned.  It  is  the 
preparing  of  this  continent  for  homes,  and  for  the  support  of  the  genera- 
tions. All  of  these  aids  for  civilization  are  to  uplift  humanity  to  its  high 
and  peerless  'destiny. 

It  furnishes  labor,  food  and  clothing  for  the  poor;  it  furnishes  use  for 
raw  material,  and  results  in  industry,  home  and  happiness  for  millions. 

GROWTH    OF    CIVILIZATION. 

The  world  has  been  progessing  in  civilization,  in  commerce,  industries 
and  in  business  with  wonderful  rapidity  during  the  past  century  and 
especially  during  the  past  fifty  years. 

Russia  has  broken  its  lethargy,  and  is  restless  with  energy.  Asia  has 
thrown  off  its  isolation  and  its  population  half  awakened  from  a  dream  of 
a  thousand  years  is  stretching  forth  its  hands.  India  is  contending  for  its 
ancient  glory.  Afiica  is  showing  to  the  world  its  rich  fertile  soil,  its 
rivers,  its  gold  and  diamonds,  and  treasures  for  commerce  and  agriculture,' 
All  South  America  is  organizing  for  civilized  growth  and  work  with  its 
wealth  of  soil  and  mines  to  tempt  the  industry  of  man. 

The  islands  of  the  sea  from  the  almost  continent  of  Australia  to  the 
little  islands  are  becoming  active  struggling  centers  for  their  part  of  com- 
merce. The  business  area  of  the  United  States  in  less  than  a  century  has 
spread  from  the  small  territory  east  of  the  Alleghanies,  to  an  empire  ex- 
tending across  a  continent  from  some  3,000,000  to  62,000,000  people  now 
scattered  over  3,400,000  square  miles  and  overflowing  with  business,  en- 
ergy and  push,  eager  to  develop  the  resources  of  their  continent,  and  pre- 
pare it  for  the  habitation  of  the  coming  hundreds  of  millions.  The  whole 
earth  is  rapidly  being  prepared  for  the  comfortable  occupation  of  man. 

The  world  is  constantly  outgrowing  its  appliances  for  civilization.  The 
circulating  medium  of  exchange  is  no  exception  to  the  rule  All  hitherto 
adopted  forms  of  money  ha^e  been  outgrown  in  kind  and  in  volume. 

The  skins  of  wild  animals  at  an  early  age  were  the  money  of  exchange. 
This  was  outgrown  and  they  stored  the  skins,  cutting  off  the  ears  and 
passing  them  as  a  more  convenient  form  of  money,  the  owner  being  en- 
titled at  any  time  to  call  for  the  corresponding  pelts.  This  was  the  first 
bank  of  deposit.  At  a  later  age  stamped  pieces  of  leather  were  the  evi- 
dences of  value,  gold  and  silver  not  being  enough  in  volume.  The  Chinese 
have  used  paper  money  for  thousands  of  years  past. 


8 

Drafts,  certificates  of  deposit,  promissory  notes  and  orders  for  mom 
ivere  used  by  the  ancients  to  increase  the  volume  of  the  medium  of  ex- 
change. 

INTERNATIONAL   DEMAND. 

The  following  demands  for  large  loans  are  now  on  the  market  of  the 
world: 

Aurtro- Hungary $100,000,000 

France 182,000,000 

Mexico 40,000,000 

Argentine  Republic 500,000,000 

Other  South  American  States 725,000,000 

African  Mines,  Trust  Companies,  etc 350,000,600 

$1,897,000,000 


Other  nations  want  fully  as  much  more,  to  say  nothing  of  local  demands 
in  each  nation. 

In  the  Baring  Bros,  trouble,  Lord  Salisbury  refused  to  allow  the  Bank 
of  England  to  furnish  aid.  Thereupon  the  President  of  the  Bank  said  to 
him :  "My  Lord,  I  am  instructed  to  tell  you,  in  case  you  refuse,  that  un- 
less the  Government  comes  to  the  rescue,  there  is  hardly  a  bank  in  the 
United  Kingdom  that  can  be  relied  upon  to  meet  the  demand  of  its  cred- 
itors TWENTY-FOUR  HOURS  AFTER  THE  DISASTER  WE  APPREHEND.  The  relief 

was  quickly  ordered. 

It  is  evident  from  the  facts  already  cited  that  there  is  an  insufficient 
supply  in  the  United  States  and  that  other  nations  have  all  they  can  do 
to  take  care  of  themselves.  This  condition  of  things  drives  our  bank  to  a 
system  of 

CALL    LOANS, 

or  30  to  90  day  paper.  They  dare  not,  of  course,  make  time  loans.  As  a 
result  the  growth  and  development  of  our  Southern  and  Western  country 
is  largely  at  a  standstill. 

Who  of  you  can  take  a  call  loan  or  a  30  or  90  day  loan  and  plant  an 
orchard,  develop  a  farm,  build  a  railroad,  open  a  mine,  or  establish  any 
industry. 

ou  well  know  that  all  these  must  have  time  loans  and  such  loans  can 
never  be  had  in  a  stringent  money  market.  An  abundant  volume  of 
money  would  result  in  time  loans  all  over  the  West  and  South.  It  would 
give  employment  to  the  idle  hundreds  of  ousands  who  today  in  the 
East,  West  and  South,  are  anxious  to  work.  This  unused  labor  is  a  dead 
loss  to  the  nation.  An  idle  day  is  gone  orever,  it  can  never  be  used  to 
plant  a  single  hill  of  corn.  The  laborer  is  poorer  by  every  idle  day.  In 
the  United  States  we  are  daily  destroying  the  labor  of  over  three  hundred 
t  ousand  men,  worth  say  $1.50  per  day,  equal  $450,000  daily  or  aggregat- 
ing $135,000,000  per  year  of  300  days.  This  labor  spent  in  the  South  and 
W^est  developing  their  marvelous  resources  would  feed  and  cloth  a 
Ji  ngry  million. 

Tais  idle  labor  would  in  one  year  levee  the  Mississippi  from  St.  Paul  to 


the  Gulf.  It  would  construct  the  Henepin  Canal  the  next  year,  and 
would  in  a  few  years  complete  the  Galveston  harbor,  construct  a  Ship 
Canal  across  the  isthmus  and  another  from  the  Missouri  near  Chicago  to 
the  lakes  as  well  as  complete  other  great  national  works.  Yet  this  is  all 
lost  annually  for  want  of  money  to  pay  daily  labor. 

It  would  seem  that  our  government  was  run  on  the  theory  that  it  must 
protect  the  money  even  if  it  should  starve  citizens. 

Letters  to  this  convention  from  prominent  Eastern  financiers  protest 
against  any  charge  in  this  blundering  financial  chaos.  And  urge  that 
we  do  should  do  nothing.  The  East  has  dictated  the  finances  of  this 
nation  to  the  present.  The  job  is  not  a  credit  to  their  ability  and  it  is 
time  we  tried  a  change.  The  London  Times  says,  "The  whole  monetary 
system  of  the  United  States  is  in  a  muddle.  This  condition  is  due  to 
piecemeal  legislation."  The  case  grows  worse  in  the  hands  of  these 
financial  doctors  and  they  now  say  let  the  patient  alone  and  he  will  either 
die  or  get  well  in  timp,  and  they  don't  know  which. 

Under  such  circumstances  ii  .uay  be  well  to  try  another  mode  of  treat- 
ment. 

THE  VOLUME  REQUIRED 

should  be  ample  in  view  of  the  facts.  It  cannot  be  accurately  deter- 
mined, but  we  should  not  therefore  leave  it  without  any  solution.  Ap- 
proximation is  all  that  can  be  attained. 

Generally  the  volume  should  e  such  that  the  United  States  treasury 
could  hold  a  safe  reserve  of  say  25  per  cent  of  the  volume  issued.  So,  also, 
that  the  banks  could  hold  a  25  per  cent  reserve  of  deposits,  and  also  the 
tax  money  could  go  into  its  legal  vaults.  An  estimate  might  be  added  for 
hoarding  and  loss  by  accident.  In  addition  to  the  above  reserves  there 
should  be  a  full  volume  in  circulation  among  the  people  for  the  business 
of  the  nation.  A  volume  such  that  time  loans  could  be  abundantly 
supplied. 

More  specific  figures  would  be  suggested  by  the  following  statistics: 

State  and  National  banks  have  deposits $2,516,179,807 

Take  this  as  the  volume  of  issue  and  we  have,  say: 

Twenty- five  per  cent  for  United  States  treasury 629,044,951 

"  "          "    Bank  reserves 629,044,951 

For  tax  money 114,072,288 

Total  reserve $1,372,162,190 

Taking  this  sum  from  the  proposed  volume  there  would  be  left 
$1,144,017,617,  for  active  use. 

If  the  above  reserves  were  deducted  from  the  present  volume  of  $2,082,- 
568,942  it  would  leave  only  $710,406,734  for  daily  use.  The  increase  for 
active  circulation  under  the  proposed  volume  is  $433,61u,883.  In  other 
words,  the  country  would  hold  the  last  amount  named  to  protect  business, 
instead  of  the  present  paltry  $50,000,000.  From  this  volume  the  business 
requiring  time  loans  could  be  safely  supplied. 


10 

This  is  not  an  experimental  volume.  It  would  represent  about  $40  per 
capita  for  our  population,  while  France  uses  from  $42  to  $44  per  capita. 
We  could  safely  use  a  larger  volume  than  France  does. 

This  would  give  a  volume  of  about  $40  per  capita,  of  which  about  $20 
would  be  gold  and  silver,  and  $20  in  paper  money. 

NOT  ENOUGH  GOLD  AND  SILVER. 

The  total  gold  and  silver  coin  and  bullion  in  the  comercial  world  is : 

Gold  -. $3,984,256,589  or  $3.22  per  capita. 

Silver 4,512,754,655  or    3.65  per  capita. 

Total $8,497,011,244  or  $6.87  per  capita. 

The  annual  product  of  the  world  averaged  for  eight  years  is: 

Gold $108,276,258  or  .08  per  capita. 

Silver 121,389,242  or  .09  per  capita. 

Total $229,665,500  or  .17  per  capita. 

The  business  of  the  world  cannot  be  run  on  such  a  small  circulating 
medium. 

The  nation  finds  the  metallic  supply  wholly  insufficient  and  supple- 
ments its  use  by  $2,178,642,376  of  unsecured  paper  money  in  order  to  con- 
duct the  world's  business. 

The  gold  in  the  United  States  represents  only  $694,869,680,  or  $11  per 
capita. 

The  annual  increase  is  about  25  cents  per  capita. 

The  total  amount  of  silver  is  about  $485,370,497,  or  $8  per  capita.  The 
annual  increase  is  about  74  cents  per  individual.  Gold  and  silver  would 
therefore  give  only  $19  per  capita  and  about  85  cents  per  capita  annual 
increase.  The  total  volume  of  gold  and  silver  in  the  world  is  only  about 
$5.75  per  capita  of  the  world's  population.  There  is  no  alternative  but  to 
issue  paper  money  to  supplement  gold  and  silver. 

WHAT  IS  THE  REMEDY? 

Several  have  been  proposed,  but  they  are  inadequate,  local  and  partisan. 
FREE  COINAGE  or  SILVER  cannot  accomplish  the  desired  results.  Theannuai 
increase  of  our  population  is  such  that  the  coinage  of  our  entire  national 
silver  product  would  only  give  the  per  capita  for  our  increase.  It  will  in 
no  manner  relieve  the  standing  need. 

The  great  objection  to  free  coinage  is  that  our  annual  product  is  worth 
in  the  market  $46,000,000.  When  coined  it  represents  $64,000,000,  or  $18,- 
000,000  profit  added  by  the  Government  agreeing  to  pay  tjaat  difference  01 
demand.  This  makes  a  present  of  $18,000,000  annually  to  the  producers, 
of  silver. 

The  people  are  now  buying  all  of  this  silver  at  about  97  cents  per  ounce^ 
Why  should  they  pass  an  Act  of  Congress  raising  the  price  against  them 
selves  to  $1.29. 


11 

Some  in  this  convention  urge  that  free  coinage  will  cause  this  difference1 
to  disappear.  So  it  will  by  permanently  adding  the  difference  to  the 
present  cost.  Free  coinage  will  cause  it  to  disappear,  by  transferring  it 
from  the  benefit  of  the  buyer  (the  people)  to  the  benefit  of  the  seller  (the 
silver  owner).  That  is  the  free  coinage  act  of  congress  is  worth  about  32 
cents  on  each  ounce,  and  silver  is  worth  the  other  97  cents.  The  silver 
belongs  to  the  silver  men,  and  the  Act  of  Congress  belongs  to  the  people, 
and  the  silver  men  ask  the  people  to  donate  to  them  the  Act  of  Congress, 
worth  32  cents  per  ounce  of  silver,  and  then  let  the  people  pay  them  for 
the  whole  thing. 

Why  do  the  people  of  the  United  States  want  to  advance  the  price  of 
silver  on  themselves  ? 

Let  the  people  buy  and  store  for  their  use  all  the  silver  they  want,  or 
that  is  profitable  to  them  to  buy. 

FREE    COINAGE    IS    NOT    IN    ISSUE 

before  the  people.  The  silver  owners  do  not  ask  free  coinage  and  possibly 
do  not  want  it.  Free  coinage  means  that  the  silver  be  coined  into  dollars, 
and  delivered  to  the  owner.  The  silver  owners  set  forth  their  demand  in 
their  silver-bill  of  last  Congress.  This  bill  provides  that  the  owners  of 
silver  may  deposit  their  bullion  in  any  mint,  and  may  take  either  the 
coined  silver  or  paper  money  therefor,  the  paper  money  exchangeable  on 
demand  for  gold  and  a  full  legal  tender  for  all  debts. 

The  silver  bullion  is  not  made  a  legal  tender,  only  the  paper  money  is- 
sued therfor.  The  bill  does  not  even  require  the  silver  bullion  to  be  held 
to  redeem  the  paper  money  issued.  It  is  simply  stored  in  the  United 
States  vault  as  an  asset.  The  people  are  responsible  to  pay  in  gold  the 
paper  money  issued  and  would  have  to  sell  silver  in  the  market  of  the 
world  for  whatever  it  would  bring.  If  we  are  going  to  issue  paper  money, 
which  we  should  do,  let  us  issue  it  direct  from  the  people,  based  on  the 
wealth  of  the  nation. 

This  silver  deal  will  cost  the  people  $18,000,000  extra  annually,  which, 
with  5  per  cent  interest,  would  amount  in  fifty  years  to  some  $10,993,695,- 
800.  That  is  the  people  would  be  paying  that  sum  to  the  money  power 
for  the  privilege  of  issuing  paper  money  via  the  silver  route. 

You  people  who  are  using  money  and  paying  for  it  read  again  the  above 
elucidation,  and  then  take  a  firm  stand  for  a  sufficient  volume  of  safe 
paper  money.  You  should  refuse  to  support  any  bill  extending  the  use 
of  silver  unless  the  same  bill  secures  you  a  full  volume  of  paper  money. 
Unless  you  do  you  will  never  get  any  relief  beyond  the  limited  amount  of 
silver.  You  may  then  have  to  fight  a  combined  gold  and  silver  monopoly. 
Nothing  but  a  constitutional  amendment  will  save  you. 

That  our  government  should  buy  our  silver  product  and  hold  it  as  a 
reserve  for  such  time  as  may  be  advisable,  would  seem  to  be  good  as  far  as 
it  goes,  but  it  can  not  meet  the  demand  for  a  full  circulating  medium. 
Another  remedy  suggested  is  the 


12 

50  YEAK  2  PEE  CENT.  BONDS. 

This  is  simply  a  scheme  to  aid  banks  at  the  expense  of  the  people,  and 
.seems  to  have  had  its  origin  and  backing  in  the  secret  councils  of  those 
who  wish  to  monopolize  the  money  system  of  the  United  States. 

Look  at  it!  Its  advocates  say,  issue  these  bonds  and  sell  them,  and  re- 
deem the  4  per  cent  bonds,  and  let  the  national  banks  buy  the  2  per  cent 
bonds  as  a  basis  of  circulation.  How  will  it  work?  Will  the  owner  of  4 
per  cent  bonds  exchange  even  for  2  per  cent  bonds?  Certainly  not.  Then 
if  you  sell  the  2  per  cent  bonds  at  par  and  pay  a  premium  on  the  4  per 
cent  bonds  you  will  have  to  pay  all  the  4  per  cent  ones  will  earn  up  to 
maturity.  We  will  then  be  paying  6  per  cent  instead  of  4  per  cent  as  now, 
and  that  does  not  increase  our  circulating  medium  a  dollar.  The  people 
are  simply  saddled  with  more  interest. 

The  sale  of  2  per  cent  bonds  to  banks  as  a  basis  of  circulation  is  a  rob- 
bery of  the  people.  To  illustrate :  The  United  States  issues  say  $100,000, 
in  2  per  cent  bonds,  you  wishing  to  open  a  bank  take  $100,000  cash,  now  in 
circulation,  and  pass  it  over  to  the  United  States  for  the  $100,000  in 
bonds.  Next,  you  hand  back  your  bonds,  as  a  deposit,  to  the  United 
States,  and  get  back  your  $100,000  cash  for  a  bank  capital,  and  for  fifty 
years  the  tax  payers  through  the  government  pay  you  2  per  cent  per  year, 
$100,000  interest  on  the  bonds  for  doing  a  banking  business  on  your  orig- 
inal $100,000.  If  you  use  the  semi-annual  interest  to  buy  more  bonds,  so 
as  to  make  it  compound,  you  will  at  the  maturity  of  the  bonds  have  your 
original  $100,000  plus  $100,000  interest,  plus  about  $70,895  bonds  bought 
with  interest  on  interest,  making  a  total  profit  of  $170,895  for  doing  busi- 
ness on  your  own  money.  But  during  this  fifty  years  your  original  $100,- 
000  will  be  loaned  out  to  the  same  tax  payers  who  are  paying  2  per  cent 
interest  on  the  bonds  to  you.  This  loaned  out  capital  will  bring  in  ruling 
rates  which  by  the  scarcity  of  money  will  be  high.  This  with  the  profits 
arising  from  the  periodical  wrecking  of  the  people  ought  to  satisfy  the 
owners  of  money.  It  will,  however,  engender  the  thought  among  the 
masses  that  the  banks  should  be  killed  off.  Our  present  banking  capital 
is  some  $700,000,000.  At  the  end  of  fifty  years  operating  under  this  bond 
scheme  the  banks  would  own  their  capital  stock  $700,000,000  plus  $1,196,- 
265,000  interest  on  bonds,  plus  over  $3,000,000,000  interest  on  the  capital 
stock  for  fifty  years.  That  is  the  banks  will  own  all  the  money  in  the 
United  States  and  have  the  people  in  debt  to  them  nearly  $3,000,000,000 
You  perceive  at  once  that  this  scheme  will  not  increase  our  circulating 
medium.  This,  hower,  is  not  as  costly  to  the  people  as  the  proposed 
silver  bill,  which  in  fifty  years  costs  over  $10,000,000,000  extra. 

Another  proposed  scheme  to  place  the  money  power  in  the  hands  of  a 
few  as  a  monopoly  is  the 

CLEARING-HOUSE    PLAN. 

It  is  embodied  in  a  proposed  national  clearing-house  system  to  be  in- 
corporated under  an  Act  of  Congress,  by  which  a  confederation  of  banks 
can  put  up  approved  collateral  with  the  clearing-house  and  receive  clear- 


13 

ing-bouse  notes,  to  be  legal  tender,  tbe  combined  clearing-bouse  being 
responsible  for  redemption  in  case  tbe  individual  bank  fails  to  redeem. 
Tbis  system  is  put  fortb  by  a  prominent  eastern  banker  wbo  asserts  tbat 
we  need  no  more  money.*  Yet  tbis  wbole  scbeme  is  to  increase  tbe  circu- 
lating medium,  but  giving  tbe  banks  a  monopoly  of  issuing  and  controlling 
it.  Its  weak  point  is  in  placing  back  of  our  currency  no  greater  responsi- 
bility tban  tbe  banks  and  tbeir  property.  It  also  gives  tbe  banks  tbe  right 
to  obtain  money  witbout  interest  and  loan  it  on  interest. 

Better  let  tbe  government  issue  tbe  money  witb  tbe  resources  and  wealtb 
of  tbe  wbole  people  of  tbe  United  States,  valued  at  $71,000,000,000  back  of 
it  for  redemption.  If  tbe  property  of  a  combination  of  banks  back  of  a, 
money  issue  is  good,  tben  tbe  wealtb  of  tbe  nation  back  of  tbe  issue  is 
better. 

As  a  nation  we  want  no  money  for  tbe  people  wbicb  is  only  backed  by 
the  responsibity  of  a  small  part  of  tbe  people  baving  absolute  control  of  it 
for  selfish  ends. 

FARMEhS'     ALLIANCE    SCHEME. 

This  scheme  has  some  sound  points  in  it.  Land  can  be  safely  used  as  a 
security  in  the  national  bank  system  as  well  as  bonds.  Allowing  the  title 
to  land  at  a  valuation  of,  say,  its  averaged  assessed  value  for  the  preceding 
five  years,  and  not  to  exceed  one-half  of  its  cash  value,  to  be  pledged  to 
the  government  under  the  form  of  a  national  bank  incorporation,  would 
give  relief  to  the  farming  communities. 

It  would  substitute  a  national  bank  for  a  sub-treasury ;  a  set  of  bank 
officers  elected  by  the  farmers  for  their  banks  to  manage  the  loans  for  a 
set  of  sub-treasury  agents;  a  responsibility  to  the  government  for  large 
aggregate  sums  under  the  bank  laws,  instead  of  the  inspection  of  thous- 
ands of  small  changing  loans.  The  supervisions  of  the  Bank  Examiners 
under  present  laws  as  to  the  solvency  of  the  bank  would  be  all  that  was  re- 
quired, while  the  bank  officers  would  supervise  all  detail  business  and  loans 
to  individuals. 

The  great  objection  to  the  sub-treasury  scheme  is  that  it  is  local  and 
partisan,  and  only  helps  one  class  instead  of  all  classes. 

The  circulating  medium  should  be  issued  by  authority  of  the  whole 
population  and  should  be  backed  by  the  entire  v.vnlth  of  the  nation,  and 
should  be  controlled  for  the  common  benefit  of  all.  The  2  per  cent  bond 
system — the  free  coinage  system — the  national  bank  clearing  house  issue 
and  sub-treasury  plans  fail  because  they  are  in  the  interest  of  localities  and 
minorities.  If  temporarily  successful  they  would  soon  be  destroyed  by 
the  majority  as  unjust.  Justice  and  equity  to  all  must  be  at  the  founda- 
tion of  any  system  adopted  by  our  nation. 

At  present  the  United  States  Treasury  throws  its  reserve  power  to  sup- 
port Eastern  banks.  It  is  very  probable  that  the  West  would  be  denied 
any  such  relief  in  an  emergency.  Over  $30,000,000  of  United  States 
money  is  in  banks  without  interest  and  largely  without  security.  The  re- 
cent panic  demonstrated  both  in  the  United  States  and  in  England  that  at 


14 

times  the  power  of  the  nation  must  come  to  the  financial  relief  of  the  peo- 
ple. This  then  should  be  put  in  a  legislative  system  on  safe  business 
principles  within  the  reach  of  all  parts  of  the  country  for  the  common 
.good. 

SUGGESTED-   LEGISLATION. 

In  preparing  the  scheme  which  is  submitted  for  your  consideration  I 
have  retained  the  safeguards  existing  in  the  money  systems  of  the  United  I 
States,  England,  France  and  Germany,  and  have  added  such  measures  as 
will  give  a  uniform,  practicable,  elastic  system,  free  from  inflation,  con- 
traction, repudiation  or  a  change  of  the  abstract  standand  of  value.  A 
system  based  on  the  authority  of  the  people,  backed  by  the  wealth  of  the 
people,  and  administered  for  the  benefit  of  the  whole  population.  Using 
all  of  our  gold  and  silver,  and  supplementing  their  use  by  a  legal  tender 
of  $20  to  $25  per  capita,  which  represents  2  cents  on  the  dollar  of  our 
national  wealth. 

A    CONSTITUTIONAL    AMENDMENT 

is  placed  at  the  foundation  of  the  proposed  system. 

One  of  the  greatest  dangers  in  our  present  law  is  the  doubt  as  to  the 
constitutional  power  of  Congress  to  make  paper  money  a  legal  tender. 
The  United  States  Supreme  Court  first  decided  by  five  Justices  to  three 
that  Congress  had  no  power  to  make  paper  money  a  legal  tender,  Chief 
Justice  Chase  rendering  the  opinion,  fa  VX/O>X,  .  \ 


One  of  the  five  resigned.  Congress  increased  the  number  of  Justic 
from  eight  to  nine;  the  two  vacancies  were  filled  by  men  who  joining  the 
opinion  of  the  minority  held  that  as  a  war  measure^  Congress  had  power 
to  make  paper  money  a  legal  tender,  j  Q  \/\/<&Jtl&  •  jJj£jr  *~*  (hiKU 

This  decision  stood  five  Justices  to  four.  Three  mojeoFthe  four  have 
died,  and  their  places  have  been  filled  by  those  who  believe  in  this  power, 
and  in  its  latest  decision  our  United  States  Supreme  Court  holds  by  eight 
to  one  that  Congress  can  make  anything,  in  any  quantity,  a  legal  tender. 
In  other  words,  the  doors  are  thrown  wide  open  to  inflation  of  the  worst 
form.  Even  now,  are  proposed  measures  that  have  no  limit  to  currency 
issue.  A  future  administration  and  Supreme  Court  could  overrule  the 
above  decision  and  hold  that  the  whole  currency  issued  was  unconstitu- 
tional and  void,  and  was  not  even  a  claim,  against  the  nation.  Such  a  de- 
cision would  leave  a  gold  and  silver  money  in  absolute  control.  And 
where  would  the  people  find  relief. 

Three  dangers  are  at  the  very  root  of  our  financial  laws,  ruinous  infla- 
tion, constitutional  repudiation  and  a  threatened  change  of  the  gold  dollar 
as  a  measure  of  values. 

A  safe  monetary  system  is  one  of  the  essential  elements  of  the  prosperity 
of  this  nation.  It  must  stand  before  the  people  of  this  and  other  nations, 
founded  upon,  and  guarded  by  constitutional  power,  protecting  it  from 
the  dangers  of  inflation,  contraction,  repudiation,  or  change  of  the 
standard  of  values,  and  pledging  the  faith,  and  resources  of  the  nation  as 


15 

the  power  and  will  of  the  nation  to  exchange  gold,  silver  and  currency  at 
par  on  demand. 

An  amendment  worded  about  as  follows  would  cover  the  ground : 

PR JPOSED  CONSTITUTIONAL  A.MENDNENT. 

ARTICLE  XVI.  SECTION  1.  A  national  currency  circulating  medium 
shall  be  issued  to  the  amount  of  twenty  dollars  per  capita,  as  shown  by  the 
census  of  1890  and  by  each  succeeding  census,  for  the  proper  redemption 
of  which  when  required,  the  resources,  the  property  and  the  faith  of  the 
nation  are  pledged;  for  which  redemption,  Congress,  by  a  two-thirds  vote 
of  each  House,  may  provide  for  the  collection  of  Government  revenues  and 
taxes,  in  gold  or  silver  coin. 

SEC.  2.  Said  currency,  with  gold  and  silver  coin  of  the  United  States  of 
present  weight  and  fineness,  the  gold  dollar  being  the  standard  or  unit  of 
values,  and  such  notes  as  may  be  issued  in  lieu  of  gold  or  silver  coin  and 
bullion,  held  exclusively  for  the  redemption  thereof,  shall  constitute  the 
only  legal  money  of  these  United  States,  and  shall  be  received  at  par  in 
satisfaction  of  all  obligations  for  the  payment  of  money  within  the 
jurisdiction  of  the  United  States.  Said  gold  and  silver  coin  and  currency 
shall  be  exchangeable  at  par  value. 

SEC.  3.  Congress  shall  have  power  to  enforce  this  Article  by  appropri- 
ate legislation,  but  shall  have  no  power  to  increase  or  decrease  said  issue; 
provided  that  after  the  issue  of  1900,  Congress  may,  by  a  two-third  vote 
of  each  House,  reduce  the  rate  of  any  further  issue  per  capita  from  time 
to  time. 

This  amendent,  underlying  our  national  system  of  finances  would  give 
us  the  best  foundation  and  safeguards  ever  yet  adopted  by  any  nation. 

The  volume  is  protected  against  inflation,  contraction  or  repudiation. 
It  represents  about  two  cents  on  the  dollar  of  our  national  wealth  of  some 
3,400,000  square  miles  of  land  and  national  wealth  of  $71,000,000,000. 
This  is  in  legal  effect  a  first  mortgage  given  by  the  nation  to  secure  redemp- 
tion. With  such  security  the  national  currency  would  be  considered  gilt- 
edge  paper  in  any  market  in  the  world.  It  would  be  received  with  greater 
confidence  than  Bank  of  England  notes. 

The  gold  dollar  is  today  the  standard  by  which  all  values  in  the  United 
States  are  rated  or  measured,  and  as  an  abstract  standard  of  values,  this 
amendment  removes  from  controversy  or  doubt  that  disturbing  element  by 
fixing  the  gold  dollar  as  the  standard  of  measure.  It  at  the  same  time 
does  full  justice  to  silver,  by  making  it  and  paper  money  a  legal  tender, 
with  gold  at  the  par  value.  In  this  way  the  whole  people  make  the 
difference,  if  any,  between  the  market  value  and  the  coined  value,  and 
when  exchanged  for  gold,  repay  the  difference.  The  double  standard  is 
not  really  required.  The  use  of  two  metals,  the  government  standing  re- 
sponsible for  any  difference  in  value  in  all  that  can  be  obtained.  The 
Government  buying  the  silver  and  coining  or  holding  it  makes  the  differ- 
ence between  the  market  value  and  the  money  value  ;  and  repays  that 
difference  when  it  gives  gold  for  the  silver.  This  is  the  same  thing  that 


16 

occurs  when  a  paper  dollar  is  issued.  The  United  Sates  makes  a  gold 
dc  ar  net  at  time  of  issue,  and  when  the  paper  dollar  is  taken  back  by  the 
United  States  it  returns  the  gold  dollar.  As  a  commercial  or  scientific: 
fact  nothing  other  than  the  above  has  ever  been  done,  and  as  that  is  a 
plain  law  of  nature  nothing  else  can  ever  be  done.  You  may  cover  that 
simple  idea  under  volumes  of  words,  sophistries  or  legislative  enactments 
and  that  simple  little  law  of  nature  will  always  appear  at  the  settlement 
and  adjust  the  difference  and  no  one  can  prevent  it. 

This  amendment  would  protect  the  currency  against  the  dangers  of  the 
John  law,  or  Argentine  Republic  scheme,  and  from  the  dangers  that  beset 
the  Continental  money.  It  is  a  greater  safeguard  than  is  thrown  around 
the  Bank  of  England  notes. 

No  nation  can  place  back  of  its  issues  such  security  as  this  would  give 
to  American  money.  England  cannot  place  back  of  an  issue  the  resources 
of  Canada,  Australia,  India  or  her  African  possessions,  for  at  any  time 
they  Height  leave  England  and  set  up  for  themselves,  leaving  only  the  little 
island  to  redeem  the  currency  issued.  France  and  Germany  are  to  small. 
Russia  is  too  insecure  in  her  form  of  government.  But  the  United  States 
with  its  vast  area,  its  peaceful  and  stable  form  of  government,  and  its 
citizens,  each  an  owner  in  the  currency,  is  in  position  to  issue  a  currency 
that  would  be  received  at  once  by  any  nation  as  a  medium  of  exchange — a 
representative  of  gold  at  par,  and 

AS    GOOD    AS    GOLD. 

Such  a  legal  tender  note  is,  in  money  effect,  the  clearing-house  certifi- 
cate of  the  nation,  backed  by  the  national  wealth,  good  in  any  clearing 
house  in  the  United  States,  instead  of  a  certificate  backed  by  any  number 
of  banks,  and  only  good  where  they  wish  to  accept  it  by  courtesy.  It  is  a 
check  signed  by  authority  of  the  people  of  the  United  States,  backed  by 
over  $71,000,000,000  of  the  people's  wealth,  good  at  any  counter  of  any 
bank,  instead  of  an  individual's  check,  only  good  at  his  own  bank  and  in 
his  own  locality.  It  is  the  promissory  note  of  the  nation,  secured  by  a 
constitutional  mortgage  on  over  2,500,000,000  acres  of  land  and  the  cities, 
railroads  and  civilization  thereon,  payable  to  bearer  and  good  from  any 
debtor  to  any  creditor,  instead  of  the  private  note  of  a  citizen,  secured  by 
a  mortgage  on  a  few  acres  of  land,  and  only  good  at  a  discount  to  those 
who  wish  to  buy  it.  It  is  a  representative  of  value  for  exchange  purposes, 
mutually  agreed  upon  by  62,000,000  of  people  for  their  joint  benefit, 
backed  by  their  constitutional  bond  to  secure  redemption  when  required, 
on  which  bond  the  people  pay  no  interest. 

Such  a  currency  circulating  medium  possesses  all  the  elements  of  safety 
offered  in  all  other  proposed  systems  combined,  and  many  others  that 
cannot  be  introduced  into  any  other  system,  and  is  as  good  as  gold. 

Confidence  would  never  be  lost  in  this  medium,  for  the  amendment 
would  prevent  Congress  or  politicians  or  political  parties  from  disturbing 
the  foundations,  as  at  present. 


17 

AND    SILVER    BASIS. 

An  issuance  of  paper  money  based  on  gold  and  silver,  dollar  for  dollar, 
gives  no  increase  in  volume.  Every  dollar  of  paper  issued  locks  up  a 
dollar  of  coin  for  redemption. 

Again,  an  issue  of  say  two  billions  paper  money,  based  on  one  billion 
coin  reserve  represents  the  other  billion  of  the  paper  money  secured  only 
by  the  wealth  of  the  nation.  The  true  plan  is,  put  all  the  gold,  silver,  real 
estate,  cities,  railroads,  improvements,  personal  property,  etc.,  of  the  value 
of  S71,000,000,000  solid  back  of  the  issue  of  say  $2,500,000,000,  holding  the 
coin  for  such  occassional  use  thereof  as  may  be  required.  The  whole 
wealth  of  the  nation  back  of  an  issue  is  better  than  any  part  of  the  wealth. 
The  coin  basis  of  any  issue  is  a  plan  in  the  interest  of  the  owners  of  the 
coin,  and  gives  no  increase  in  volume. 

AN   ACT    OF    CONGRESS      ' 

to  put  in  operation  this  plan  would  be  substantially  as  the  present  law  of 
June  3,  1864.  The  department  of  the  controller  of  currency,  the  buieauof 
printing  and  engraving  would  remain  the  same. 

The  system  adopted  should  be  complete  in  itself,  it  should  be  as  broad 
as  the  United  States  in  its  effects,  it  should  be  planned  to  extend  through 
the  centuries. 

While  by  one  depatment  it  gathered  in  the  money  annually  by  taxation 
and  revenues,  it  should  annually  return  the  money  to  the  people  equitably 
in  all  parts  of  the  nation,  seeking  to  collect  taxes  and  revenues  from  the 
rich,  and  largely  returning  it,  through  the  laboring  classes,  to  circulation. 

This  would  be  a  system  whereas  it  is  now  cnuos. 

THE  BILL. 

It  is  a  principle  in  law  that  legislative  enactments  should  use  as  much  of 
existing  laws  and  machinery  as  possible  in  order  to  produce  new  results. 
For  the  reason  that  we  are  familiar  with  what  has  been  in  use  and  know 
how  to  use  it. 

Operating  under  this  rule  I  have  taken  existing  laws  as  shown  by  the 
Act  of  June  3,  1864  as  the  frame  work  of  a  new  or  complete  system  of 
finances  of  the  United  States  and  have  added  to  it  such  sections  and  parts 
of  a  section  as  will  produce  a  comprehensive  uniform  system  easily  under- 
stood and  easily  operated  by  those  familiar  with  existing  laws. 

The  system  embraces  the  use  of  all  of  our  American  out-put  of  gold  and 
silver  and  a  supplemental  volume  of  paper  money  sufficient  in  quantity  to 
safely  do  the  business  of  the  nation. 

The  abstract  gold  standard  of  value  now  in  operation  is  retained. 
Silver  is  to  be  bought  by  the  United  States  at  its  market  value  and  use 
either  by  coining  or  held  as  bullion  and  paper  money  issued  for  it. 

Any  difference  between  the  value  of  a  silver  dollar  and  a  gold  dollar  to- 
be  paid  on  demand  by  the  United  States  by  receiving  silver  dollars  at  par 
for  gold  as  is  now  done. 


18 

The  paper  money  to  be  issued  by  authority  of  all  the  people,  backed  by 
the  wealth  of  all  the  people,  and  circulated  for  the  benefit  of  the  people. 

All  present  forms  of  paper  money  to  be  taken  up  by  the  new  issue,  uniform 
in  appearance,  thus  getting  rid  of  the  seven  or  eight  different  kinds  of 
paper  money  in  circulation. 

/    A  brief  comment  on  each  section  of  the  bill  better  shows   what  can  and 
what  can  not  be  done  under  is  provisions. 

SECTION,  1.  This  is  the  same  as  the  present  law  of  June  3,  1864.  It 
provides  for  the  office  and  appointment  of  a  comptroller  of  finances, 
who  is  the  same  as  our  present  comptroller  of  currency. 

SEC.  2.  Is  the  same  as  the  present  law.  It  provides  for  making  the 
seal  of  office  and  for  certified  copies  of  documents  in  the  office. 

SEC.  3.  Is  the  unchanged  present  law  and  provides  for  office  room, 
vaults,  safes,  engraving  and  other  conveniences  for  the  transaction  of  the 
business  of  the  department. 

SEC.  4.  This  in  addition  to  the  present  law  provides  for  the  issue  of  $20 
<or  any  other  sum)  per  capita  on  the  census  of  1890. 

This  with  gold  and  silver  would  give  about  $40  per  capita.  France 
uses  from  $42  to  $44.  It  is  a  small  country,  with  facilities  for  quick  tran- 
sit, and  can  ship  money  from  one  point  to  another  in  a  few  hours,  to  meet 
sudden  demands. 

Whereas  with  us  the  area  is  so  great  that  money  can  not  be  readily  sent 
from  one  point  to  any  other  to  meet  sudden  large  demands.  In  my 
opinion  a  paper  issue  of  $25  per  capita  would  be  a  safer  amount. 

This  would  represent  only  about  2  cents  on  the  dollar  of  our  national 
wealth  of  some  3,400,000  square  miles  of  the  richest  land  in  the  world, 
which  with  the  wealth  of  the  people  is  estimated  at  $71,000,000,000. 

This  would  be  safe  and  conservative  financering.  This  section  provides 
for  a  system  of  numbering  the  notes  issued  and  for  retaining  a  duplicate, 
canceled  copy  of  each  denomination,  for  detection  of  counterfeit.  There 
is  also  required  to  be  printed  on  the  face  of  each  note  a  statement  that  it 
must  be  surrendered  in  the  year  of  redemption  for  a  new  note  as  provided 
in  section  6. 

This  section  4  also  makes  gold  and  silver  coin  of  the  United  States  and 
these  notes  a  legal  tender  in  payment  of  all  public  and  private  obligations 
for  the  payment  of  money  in  the  United  States,  and  also  makes  them 
mutually  exchangeable  at  par  as  at  present  in  such  manner  as  shall  best 
subserve  the  public  interest. 

SEC.  5.  The  same  as  the  present  law.  It  provides  for  taking  up  muti- 
lated notes  and  the  issue  of  the  new  ones  in  place  thereof;  and  that  notice 
thereof  be  published  for  the  public  benefit  in  the  Bulletin  of  Finances,  a 
monthly  to  be  published  by  the  Comptroller,  constantly  informing  the 
the  public  on  finances,  as  provided  in  section  33. 

SEC.  6.  Is  mostly  a  new  section.  Every  twenty  years  it.  requires  the 
whole  issue  of  paper  money  to  be  called  in  and  destroyed  and  also  that 


19 

the  plates  and  dies  used  to  produce  it  shall  be  destroyed,  and  that  a  new 
issue,  from  new  plates  and  designs,  shall  be  put  into  circulation.  The  ob- 
ject of  this  is  to  ascertain  how  much  of  the  old  issue  is  lost  or  destroyed 
and  replace  it  by  a  new  issue  to  keep  up  the  volume.  It  is  also  designed 
to  destroy  the  circulation  of  all  counterfeit  money,  and  to  render  useless 
any  appliance  of  counterfeiters  for  counterfeiting  the  old  issue.  Under 
this  section  the  money  is  only  a  legal  tender  for  twenty  years,  after  that 
it  must  be  surrendered  and  canceled  by  the  new  issue. 

SEC.  7.  Is  entirely  new.  After  the  money  is  prepared  the  United  States 
can  not  give  it  away,  and  section  7  provides  for  putting  it  in  circulation 
The  new  issue  would  represent  from  $1,240,000,000  to  $1,550,000,000. 

Of  this  sum  £534,088,802  would  be  used  to  take  up  the  present  paper 
money  of  the  United  States  and  national  bank  notes,  not  including  gold 
or  silver  certificates.  This  will  leave  from  $705,9)1,198  to  $1,015,911,198, 
as  the  issue  shall  be  $20  or  $25  per  capita. 

What  shall  be  done  with  this  vast  sum?  Section  7  further  provides  that 
the  United  States  may  buy  legally  issued  bonds  of  states,  counties  and  in 
corporated  cities  of  over  5000  inhabitants.  Such  bonds  to  be  issued 
for  not  to  exceed  5  per  cent  of  the  averaged  assessed  value  of  the 
property  for  the  preceding  five  years,  deducting  the  par  value  of  any 
outstanding  bonds.  These  bonds  to  be  issued  for  public  improve- 
ments, to  run  twenty  years  at  2  per  cent,  the  interest  payable  an- 
nually, or  quarterly,  to  the  Comptroller  of  Finance  at  Washington,  or  any 
sub-treasury,  a  proper  sinking  fund  to  be  provided.  The  public  issuance 
of  these  bonds  and  receipt  of  the  money  therefor  to  be  conclusive  evidence 
of  their  legal  issue,  and  a  bar  to  any  contest  of  their  validity.  These  bonds 
to  be  a  lien  on  the  property  until  paid  in  full.  Such  bonds  are  as  good  as 
any  United  States  bonds  ever  issued.  The  section  also  provides  that  the 
United  States  may  summarily  collect  the  principal  and  interest  if  any  de- 
fault is  made  in  payment  thereof. 

These  bonds  may  also  be  sold  by  the  Comproller  to  banks,  and  by  the 
banks  may  be  left  on  deposit  with  the  Comptroller  of  Finances,  as  a  basis 
on  which  the  banks  can  draw  at  any  time  money  to  use  in  their  business  as 
provided  in  section  12.  As  the  bonds  can  at  any  time  be  deposited  with 
the  United  States  and  the  par  value  drawn,  it  makes  a  practical  guarantee 
by  the  United  States  of  the  bonds. 

This  would  enable  banks  to  have  an  elastic  currency  in  all  parts  of  the 
United  States  perfectly  secured. 

Most  of  such  bonds  are  now  bearing  G  per  cent  interest.  This  plan  will 
save  4  per  cent,  and  the  taxpayers  would  have  that  much  less  taxes  to  raise. 

When  the  present  United  States  bonds  are  taken  up  it  will  save  tax- 
payers 4  per  cent  per  year  on  the  United  States  bonds.  In  addition  to  this 
the  states,  counties  and  cities  paying  2  per  cent  interest  to  the  United 
States  would  be  a  further  reduction  of  national  taxation.  This  depart- 
ment of  the  bill  will  save  millions  annually  to  the  taxpayers,  and  alone  is 
abundant  reason  for  the  passage  of  the  bill. 


20 

Under  this  section  of  the  bill  some  $400,000,000  would  probably  be  usecL. 
Not  all  of  the  indebtedness  of  states,  counties  and  cities  would  be  taken  up 
under  this  section,  because  many  of  their  bonds  are  not  yet  due.  "Under 
this  plan  the  government  ceases  to  be  a  borrower  of  money  but  through  it 
the  people  issue  their  own  money  as  a  whole,  and  thus  loan  it  to  localities, 
of  their  fellow  citizens  who  must  borrow. 

This  will  save  paying  millions  of  interest  money  annually  to  foreigners 
for  the  use  of  their  money. 

Of  course  such  a  bill  will  receive  the  opposition  of  foreign  influence. 

This  would  place,  the  banks  where  a  stringency  of  the  money  market 
could  never  occur,  as  from  any  part  of  the  United  States  banks  could  draw 
on  their  reserves  with  the  United  States  Treasury.  This  would  also  equal- 
ize interest  all  over  the  United  States. 

There  would  be  still  left  from  $300,000,000  to  1600,000,000,  not  used 
under  this  section,  which  would  be  placed  in  circulation  under  section  34, 
which  will  be  commented  upon  under  that  section. 

Sections  8,  9,  10,  11,  12,  provide  that  the  owners  of  real  estate  may  in- 
corporate a  bank  and  place  the  title  in  fee  simple  absolute,  free  of 
encumberance  with  the  United  States  based  on  its  averaged  assessed 
value  for  the  preceeding  five  years.  The  lien  of  the  United  States  being 
paramount,  during  the  continuance  of  the  bank.  The  bank  can  use  this 
real  estate  as  a  reserve  security  with  the  same  effect  as  in  case  of  bonds 
under  section  7,  up  to  its  averaged  assessed  value  for  the  proceeding  five 
years,  but  not  to  exceed  one-half  of  its  actual  value. 

Under  this  section  farmers  and  land  owners  can  receive  the  use  of  money. 
They  elect  their  own  officers,  form  a  bank  and  use  or  reloan  the  money  and 
when  not  needing  it  return  it  to  the  United  States  Treasury,  to  be  re- 
drawn and  used  when  required  during  the  20  years  of  the  bank's  exis- 
tence.  This  plan  is  of  more  value  than  the  sub-treasury  plan,  and  avoids 
all  of  its  complications. 

If  the  real  estate  advances  or  depreciates  in  value  it  is  adjusted  under 
sections  17  and  18,  or  may  be  entirely  released. 

Sections  13,  14,  15,  16,  provide  the  present  mode  of  managing  such 
banks.  Under  section  19  National  Banks  may  loan  on  real  estate. 

SEC.  22.  Has  new  matter  in  it.  The  danger  of  a  low  rate  of  interest  is 
to  over-borrow,  and  thus  produce  speculation  and  cause  inflation  of 
business. 

To  avoid  this  section  22  provides  that  the  first  $100,000  drawn  by  any 
bank  shall  bear  2  per  cent  per  year  interest. 

This  with  the  ordinary  money  in  circulation  will  conduct  all  proper 
enterprises.  The  next  $100,000,  will  draw  3  per  cent  and  the  next  4  per 
cent,  and  so  on.  These  higher  rates  will  furnish  money  to  prevent  any 
stringency,  but  will  make  business  less  profitable,  forcing  the  curtailing 
of  business  gradually  without  destroying  it  as  at  present.  This  schedule 
of  increasing  interest  rate  is  one  that  the  best  judgment  of  the  people  cans 


21 

nx.  It  can  be  altered  at  any  time  when  experimenting  shows  the  need 
of  it. 

This  is  the  natural  law  of  business  on  the  subject.  Germany  has 
recently  adopted  it.  All  banks  apply  the  same  rule. 

Sections  23  to  32  are  the  same  as  the  present  bank  law  and  need  no 
comments. 

SEC.  33.  This  is  a  new  section.  It  provides  for  the  monthly  publica- 
tion of  a  "  Bulletin  of  Finances, "  containing  concise  information  showing 
the  monthly  issue  of  currency,  showing  as  nearly  as  may  be  the  volume  of 
gold,  silver  and  currency  in  each  state  or  territory;  also  showing  the 
expenditures  of  the  government  in  each,  also  showing  the  essential  fact 
relating  to  the  condition  of  each  bank.  It  also  provides  for  the  proper 
distribution  of  these  bulletins. 

The  object  of  this  is  to  complete  the  efficiency  of  the  money  system  of 
the  United  States  and  furnish  to  the  people  correct  knowledge  on  current 
finances.  It  furnishes  the  foundation  knowledge  on  which  to  properly 
execute  section  34. 

SKC.  34.  Is  of  very  great  importance.  Our  nation  today  has  no 
organized  method  for  redistributing  the  money  that  accumulates  in  the 
"United  States  Treasury  from  revenue  and  taxes.-  At  times  vast  sums  are 
stored  to  the  detriment  of  business;  and  the  cry  is  raised  "what  shall  we 
do  with  the  surplus.  " 

This  section  provides  that  in  addition  to  the  ways  provided  in  section 
7,  this  money  shall  be  spent  for  the  usual  expenses  of  the  government. 
And  that  the  government  shall  purchase  suitable  grounds  and  erect 
thereon  buildings  for  'post-offices  and  other  public  use,  and  that  the 
expenditure  shall  be  made  annually  in  each  state  or  territory  in  proportion 
to  its  population.  Under  this  a  system  of  national  public  improvements, 
such  as  on  the  Mississippi  River  or  Nicuarngua  Canal,  or  irrigation  may 
be  carried  out. 

As  our  laws  now  are  it  is  very  difficult  to  get  any  government  building 
erected  except  in  certain  political  localities.  The  money  is  drawn  in 
from  the  people  in  every  part  of  the  country  and  should  be  re-expended 
proportionately  among  them,  as  it  came  from  them.  It  is  not  a  charity 
for  the  government  to  spend  money  in  each  community.  That  is  where  it 
should  be  spent.  Every  city  and  village  should  have  a  respectable  and 
commodious  postoffice  building  erected  and  owned  by  the  government. 

This  section  further  provides  that  this  public  work  shall  be  done  by 
•day's  labor  at  say  $1.50  per  day,. for  common  labor.  The  object  is  this: 
First-class  laborers  always  command  higher  wages  from  private  capital, 
and  the  next  grade  of  labor  is  left  unemployed.  It  is  in  this  class  that  the 
suffering  mostly  occur.  If  the  United  States  in  its  public  work  gives  em- 
ployment to  this  class  of  people  it  will  be  aiding  citizens  who  should  re- 
ceive the  care  of  the  stronger.  Such  laborers  can  not  for  various  reasons 
perform  as  much  work  per  day  as  the  best  laborers.  Public  buildings 
would  cost  just  as  much,  or  even  more,  by  employing  this  class  than  by 


22 

employing  the  best  class.  But  the  object  of  any  government  should  not 
be  to  get  the  cheapest  results  in  a  specific  case,  but  should  be  for  the  gen- 
eral good.  This  class  of  labor  must  live.  If  labor  is  not  furnished  they 
must  beg  or  steal.  In  either  of  these  cases  the  public  must  bear  the  ex- 
pense. It  is  far  better  to  keep  up  the  tone  of  respectability  among  our 
people  by  furnishing  employment  and  paying  what  the  work  is  worth. 
Thus  instead  of  the  laboring  class  feeling  that  an  ever  widening  gap  ex- 
isted between  them  and  the  form  of  government,  they  would  feel  it  to  be 
their  friend  and  would  be  interested  in  maintaining  its  existence. 

And  here  in  protection  of  our  own  laborers  would  it  not  be  well  for 
our  own  government  to  close  its  doors  to  the  innooding  of  foreign  labor. 
Why  should  we  pay  foreigners  for  labor  and  let  our  own  citizens  go  idle? 
It  is  a  noted  fact  that  where  colonies  of  foreigners  get  control  of  local 
labor  that  the  American  laborer  finds  it  too  hot  for  him  to  remain. 
'  We  should  be  generous,  but  we  should  not  be  so  generous  that  we  give 
our  employment  to  strangers,  and  drive  our  own  sons  and  daughters  of 
America  into  idleness,  shame  and  want.  If  our  legislative  halls  are  dom- 
inated by  such  a  foreign  sentiment  it  is  time  they  should  be  cleared  of  the 
un-American  element,  and  men  representing  the  American  idea  sent  •  to 
make  our  laws. 

In  conclusion  let  me  say  that  the  people  should  demand  only  such  a 
money  system  as  will  do  justice  and  equity  to  all  the  people  and  all  classes. 
While  you  complain  of  being  overreached,  you  must  not  in  return  over- 
reach, or  do  injustice  to  others.  I  would  impress  upon  you  that  all 
schemes  for  a  national  system  of  finances,  that  are  based  on  the  idea  of 
giving  a  class  of  persons  or  banks  power  to  issue  or  control  the  issue  of 
money,  are  dangerous  and  sooner  or  later  will  be  abused.  Demand  a  con- 
stitutional Amendment,  and  a  law  that  issues  the  money  by  authority  of 
the  people,  backed  by  the  pledged  wealth  of  the  whole  nation,  and  circu- 
lated for  the  benefit  of  all,  with  no  special  privilege  for  any  class,  and  in 
volume  sufficient  to  fully  transact  the  business  of  our  growing  country. 


23 


Hereto  is  attached  a  copy  of  the  proposed  Bill,  which  of  course  will  re- 
ceive such  amendments  as  may  be  best. 

The  parts  in  brackets  show  where  this  Bill  differs  from  present  Act  of 
June  3,  1864. 

A  BILL 

TO  PROVIDE    A     NATIONAL     CIRCULATING     MEDIUM,      AUD     TO    PROVIDE    FOR     THE 

CIRCULATION    THEREOF. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the  United 
States  of  America  in  Congress  assembled  : 

That  there  shall  be  established  in  the  Treasury  Department  a  separate 
bureau  which  shall  be  charged  with  the  execution  of  this  and  all  other 
laws  that  may  be  passed  by  Congress  respecting  the  issue  and  circulation 
of  a  national  circulating  medium.  The  chief  officer  of  said  bureau  shall 
be  denominated  the  Comptroller  of  Finance,  and  shall  be  under  the 
general  direction  of  the  Secretary  of  the  Treasury.  He  shall  be  appointed 
by  the  President  of  the  United  States,  with  the  approval  of  the  Secretary 
of  the  Treasury,  by  and  with  the  consent  of  Congress,  and  shall  hold  his 
office  for  the  term  of  ten  years  unless  sooner  removed  by  the  President 
with  the  consent  of  Congress.  He  shall  receive  an  annual  salary  of  eight 
thousand  dollars;  he  shall  have  a  competent  deputy  appointed  by  the 
Secretary,  whose  salary  shall  be  three  thousand  five  hundred  dollars 
per  year,  who  shall  possess  the  power  and  perform  the  duties  of  the  Comp- 
troller during  a  vacancy  in  said  office  or  during  the  absence  or  inability  of 
the  Comptroller.  The  Comptroller  shall  employ,  from  time  to,  time  the 
necessary  clerks  to  discharge  such  duties  as  he  shall  direct.  Such  clerks 
shall  be  classified  by  the  Comptroller,  subject  to  the  direction  of  the  Secre- 
tary of  the  Treasury,  which  clerks  shall  be  classified  in  the  manner  now  pre- 
scribed by  law.  Within  fifteen  days  after  notice  of  his  appointment  ""ae  shall 
take  and  subscribe  the  oath  of  office  prescribed  by  the  Constitution  and  the 
laws  of  the  United  States,  and  shall  give  to  the  United  States  a  bond  in  the 
penal  sum  of  one  hundred  thousand  dollars,  with  not  less  than  four  responsi- 
ble sureties,  to  be  approved  by  the  Secretary  of  the  Treasury,  conditional  for 
the  faithful  discharge  of  the  duties  of  his  office.  The  Deputy  Comptroller 
shall  also  take  oath  of  office,  and  give  a  similar  bond  in  the  sum  of  fifty 
thousand  dollars.  The  Comptroller  or  Deputy  Comptroller  ^hall  not, 
either  directly  or  indirectly,  be  interested  in  any  association  doing  a 
banking  business  under  this  act. 

SEC.  2.     And  be  it  further  enacted : 

That  the  Comptroller  of  Finance,  with  the  approval  of  the  Secretary  of 
the  Treasury,  shall  devise  a  seal,  with  suitable   inscriptions,  for  his  office 
a  <1«  scription  of  which,  with  the  certificate  of    approval  by  the  Secretary 


24 

of  the  Treasury,  shall  be  tiled  in  the  office  of  the  Secretary  of  State,  with 
an  impression  thereof,  which  shall  thereupon  become  the  seal  of  office  of 
the  Comptroller  of  Finance,  and  the  same  may  be  renewed  when  neces- 
sary. Every  document  executed  by  the  Comptroller,  in  pursuance  of  any 
authority  conferred  on  him  by  law,  and  sealed  with  his  seal  of  office,  shall 
be  received  in  evidence  in  all  places  and  courts  whatsoever ;  and  all  copies 
of  papers  in  the  office  of  the  Comptroller,  certified  by  him  to  be  correct 
copies  of  the  originals  in  his  office,  shall  in  all  cases  be  evidence  equally 
and  in  like  manner  as  the  originals.  An  impression  of  such  seal  directly 
on  the  paper  shall  be  as  valid  as  if  made  on  wax  or  wafer. 

SEC.  3.     And  be  it  further  enacted: 

That  there  shall  be  assigned  to  the  Comptroller  of  Finance,  by  the 
Secretary  of  the  Treasury,  suitable  rooms  in  the  Treasury  Building  for 
conducting  the  business  of  the  Bureau  of  Finance,  in  which  shall  be  safe 
and  secure  fire-proof  and  burglar-proof  vaults  in  which  it  shall  be  the 
duty  of  the  Comptroller  to  deposit  and  safely  keep  all  plates  not  neces- 
sarily in  the  possession  of  engravers  and  printers,  and  other  valuable 
things  belonging  to  his  department;  and  the  Comptroller  shall  from  time 
to  time  furnish  the  necessary  furniture,  stationery,  fuel,  light  and  other 
proper  conveniences  for  the  transaction  of  said  business. 

SEC    4.     And  be  it  further  enacted: 

That  the  Comptroller  of  Finance,  under  the  direction  of  the  Secretary 
of  the  Treasury,  is  hereby  authorized  and  directed  to  issue  a  circulating 
medium  in  the  name  of  the  United  States  of  America  [to  the  amount  of 
$20,  in  addition  to  gold  and  silver  coin,  per  capita  of  the  population  of 
the  census  of  1890.  Upon  ascertaining  each  following  census  the  issue 
shall  be  increased  to  said  $20  per  capita].  In  order  to  furnish  suitable 
notes  for  circulation  the  Comptroller  of  Finance  is  hereby  authorized 
and  required,  under  the  direction  of  the  Secretary  of  the  Treasury,  to 
cause  plates  and  dies  to  be  engraved,  in  the  best  manner  to  guard  against 
counterfeitimg  and  fraudulent  alterations,  and  to  have  printed  therefrom, 
on  paper  or  similar  material  best  adapted  therefor,  and  numbered,  the 
quantity  of  circulating  notes,  of  the  denominations  of  @ne  dollar,  two  dol- 
lars, five  dollars,  ten  dollars,  twenty  dollars,  fifty  dollars,  one  hundred 
dollars  and  five  hundred  dollars,  as  may  be  required  to  supply  the  issue 
herein  called  for.  [The  number  of  each  denomination  in  use  shall  be  such 
that  the  needs  of  the  people  shall  be  best  subserved  thereby.  The  notes 
of  each  denomination  shall  be  consecutively  numbered.  That  a 
duplicate  of  each  denomination  and  from  each  successive  plate  used 
shall  be  perforated  with  the  word  "duplicate,"  and  carefully  pre- 
served for  use  in  the  identification  of  the  originals,  and  for  the  detection 
of  counterfeits,  by  comparison  therewith.  Said  notes  shall  express  on 
their  face  that  they  are  issued  by  the  Government  of  the  United  States  of 
America  as  the  circulating  medium  of  the  people  of  the  United  States. 
They  shall  have  the  written  or  engraved  signatures  of  the  Secretary  of 
the  Treasury,  and  of  the  Comptroller  of  Finance,  and  the  imprint  of  the 
seal  of  the  Treasury,  and  shall  bear  such  other  statements  and  devices  as 
the  Secretary  of  the  Treasury  shall  direct,  and  shall  contain  a  statement 
that  "This  note  must  be  surrended  to  the  Comptroller  of  Finance  in 
exchange  for  a  new  note  of  similar  denomination  during  the  year"  (stating 


25 

the  year  for  retiring  the  same).  Said  notes,  and  gold  and  silver  coin  of 
the  "United  States,  shall  be  received  at  par,  in  payment  of  all  obligations 
within  the  jurisdiction  of  the  United  States  for  the  payment  of  money. 
The  monetary  use  of  gold  and  silver  coin  of  the  United  States  under 
existing  laws  is  not  hereby  interfered  with,  and  said  notes,  gold  and  silver 
coin  shall  be  exchangeable  at  their  par  value,  in  such  manner  as  shall  best 
•subserve  the  interests  of  the  people.] 

SEC.  5.     And  be  it  further  enacted: 

'That  it  shall  be  the  duty  of  the  Comptroller  of  Finance  to  receive  worn 
out  and  mutilated  circulating  notes  issued  hereunder,  and  with  the 
Secretary  of  the  Treasury  the  Comptroller  of  Finance  shall  compare  said 
notes  with  the  duplicates  thereof  on  file,  and  when  satisfied  that  the 
same  are  the  originals  issued  under  this  act,  they  shall  be  destroyed  by 
being  burned  to  ashes  in  the  presence  of  the  Secretary  of  the  Treasury 
•and  the  Comptroller  of  Finance  and  such  other  person  as  the  President 
shall  designate.  A  permanent  book  of  record  of  the  destruction  of  such 
notes,  with  sufficient  descriptions  thereof,  shall  be  kept  by  the  Comp- 
troller of  Finance  and  published  in  the  Bulletin  of  Finance.  After  said 
destructions  of  said  notes,  new  notes  of  the  same  denominations  and 
number  shall  be  issued  to  the  owners  of  the  destroyed  notes,  of  which 
duplicates  shall  be  kept  as  hereinbefore  provided.  Such  new  notes  shall 
be  marked  second  series  or  third  series  as  the  case  may  be. 

SKC.  6.     And  be  it  further  enacted: 

[That  in  the  year  following  each  second  census,  beginning  with  the  cen- 
sus of  1910,  the  entire  issue  of  circulating  notes  shall  be  retired  and 
destroyed  as  provided  in  section  5  herein.  And  under  the  provisions  of 
this  act  a  new  issue  shall  be  made  from  new  dies  and  plates  and  with  new 
designs,  and  shall  be  substituted  for  the  retired  notes,  and  during  the 
year  for  retiring  said  notes  each  banking  institution  doing  business  here 
under,  shall  during  the  months  of  January,  February,  March  and 
April  forward  to  the  Comptroller  of  Finance  at  least  25  per  cent  each  month 
of  said  notes  in  its  possession,  and  in  exchange  therefor  the  Comptroller 
of  Finance  shall  issue  the  new  notes  of  the  same,  denomination.  During 
the  remaining  months  of  the  year  each  of  said  banking  institutions  shall 
monthly  forward  all  of  the  old  issue  of  notes  it  may  have  or  receive  to  the 
•Comptroller  of  Finance  for  destruction  and  exchange.  During  said 
remaining  months  of  said  year  for  retiring  said  old  issue  any  person  or 
•corporation  may  forward  notes  of  the  old  issue  for  destruction  and 
>exchange  to  the  Comptroller  of  Finance.  After  the  expiration  of  the 
said  year  for  the  retiring  said  old  issue  of  notes,  the  said  old  issue  shall 
<cease  to  be  lawful  money  of  the  United  States,  and  shall  only  be  received 
by  the  Comptroller  of  Finance  for  destruction  and  exchange,  and  shall  be 
so  received  until  the  outstanding  old  issue  is  entirely  retired  and 
destroyed.]  The  dies  and  plates  used  in  producing  the  old  issue  of  notes 
shall  be  destroyed  by  fusing  in  fire  in  January  of  each  year  of  retiring,  in 
the  presence  of  the  Secretary  of  the  Treasury,  the  Comptroller  of  Finance, 
and  some  person  appointed  by  the  President.  A  record  of  the  destruction 
of  said  plates  shall  be  kept  in  the  office  of  the  Comptroller  of  Finance. 

"SEC.  7.     And  be  it  further  enacted: 

[That  for  the  purpose  of  putting  said  notes  in  circulation  the  Comp- 
troller of  Finance  shall  be  authorized  to  retire  all  outstanding  notes  <  >r 


26 

currency  of  the  United  States,  and  to  buy  and  legally  issued  bonds  of  the 
states,  counties,  and  incorporated  cities  of  over  5,000  inhabitants,  as 
he  deems  proper,  said  bonds  to  be  issued  by  said  states,  counties  and 
cities,  for  a  valuation  not  to  exceed  five  per  cent  of  the  average 
assessed  value  of  the  real  estate  in  said  state,  county,  or  city,  for 
the  five  years  preceding  the  issuance  of  said  bonds,  deducting  from  the 
the  said  issue  of  bonds  the  par  value  of  any  other  outstanding  bonds 
issued  by  said  state,  county  or  city.  Said  bonds  shall  be  a  lien  on 
all  real  estate  in  said  state,  county  or  city,  and  shall  bear  interest 
at  the  rate  of  two  per  cent  per  year,  and  shall  not  run  to  exceed  twenty 
years.  The  interest  shall  be  payable  annually  to  the  Comptroller  of 
Finance  at  Washington,  and  a  sinking  fund  shall  be  provided  in  each 
case  sufficient  to  liquidate  said  bonds  at  or  before  maturity.  The  public 
issuance  of  such  bonds,  their  delivery  to  the  Comptroller  of  Finance,  and  the 
receipt  of  the  circulating  notes  therefor  shall  be  deemed  conclusive  evidence 
of  the  legal  issuance  and  validity  of  said  bonds,  and  thereafter  no  defense 
shall  be  set  up  to  the  payment  of  principal  or  interest,  or  to  the  levying 
and  collecting  of  taxes  therefor.  All  objections  or  defense  to  the  issue  of 
said  bonds  must  be  made  by  the  parties  interested  prior  to  the  delivery 
thereof  to  the  Comptroller  of  Finance,  otherwise  they  are  forever  waived 
and  barred  as  a  defense.  Said  bonds  may  be  sold  by  the  Comptroller,  and 
such  bonds  or  any  United  States  bonds  may  be  deposited  at  par  as  reserve 
security  by  banks  in  the  same  manner  as  provided  for  real  estate  herein. 
If  said  state,  county,  or  city  shall  fail  or  neglect  at  any  time  to 
levy  and  collect  a  sufficient  tax  to  meet  the  obligations  of  said  bonds,  there 
shall  be  immediately  due  and  payable  to  the  Comptroller  of  Finance  a 
tax  on  the  real  and  personal  property  in  said  state,  county,  or  city 
in  default  on  its  last  assessment  roll  sufficient  to  meet  said  pay- 
ments and  costs  of  collecting  the  same;  and  the  same  shall  be  collected 
by  any  person  or  persons  appointed  therefor  by  the  Comptroller  of 
Finance,  who  shall  have  power  where  said  tax  is  not  paid  within  thirty 
days  after  it  is  levied  to  collect  the  same  by  seizure  and  sale  upon  war- 
rant issued  by  any  judge  ex  parte  of  any  court  of  original  jurisdiction, 
State  or  national  having  jurisdiction  of  the  property.  The  United  States 
may  become  the  purchaser  of  such  property.  Redemption  may  be 
made  within  one  year  after  sale  by  paying  the  amount  due  on  the  sale, 
costs  and  interest  thereon  at  ten  per  cent.  Provided  that  no  bonds  shall 
be  purchased  hereunder.  except  such  as  by  state  laws  are  made  subject  to 
the  terms  of  this  act.] 

SEC.  8.     And  be  it  further 'en acted: 

That  associations  for  carrying  on  the  business  of  banking  may  be 
formed  by  any  number  of  persons,  not  less  in  any  case  than  five,  who  shall 
enter  into  articles  of  association,  which  shall  specify  in  general  terms  the 
proposed  name  of  the  association,  the  object  for  which  the  association  is 
formed,  and  the  proposed  capital  stock;  and  may  contain  any  other 
provisions  not  inconsistent  with  the  provisions  of  this  act,  which  the 
association  may  see  fit  to  adopt  for  the  regulation  of  the  business  of  the 
association  and  the  conduct  of  its  affairs,  which  said  articles  shall  be  •. 
signed  by  the  persons  uniting  to  form  the  association,  and  a  copy  of  them 
forwarded  to  the  Comptroller  of  Finance,  to  be  filed  and  preserved  in  his ; 
office.  Attached  to  said  articles  of  association  shall  be  a  schedule  [of  the 
bonds  or  real  estate  offered  and  known  as  "the  reserve  security"  as  herein 
provided  for,  which  schedule  shall  accurately  describe  said  bonds,  and 
real  estate  and  the  improvements  thereon,  stating  in  whom  the  title  is. 


27 

vested  in  fee  simple  absolute,  free  of  all  incumbrances  or  liens,  and  giving 
the  yearly  assessed  value  of  said  real  estate  for  each  separate  year  for  state 
and  county  purposes  for  the  five  preceding  years,  which  schedule  shall  be 
certified  to  as  correct  by  the  proper  keeper  of  the  records  of  title  of  said 
property.  Upon  receipt  of  said  articles  and  schedule,  the  Comptroller  of 
Finance  shall  proceed  in  whatever  manner  he  deems  best  to  verify  the 
facts  set  out  in  said  schedule;  and  when  satisfied  that  the  average  assessed 
value  for  said  five  years  next  preceding  is  not  in  excess  of  half  of  the  actual 
value  of  said  real  estate,]  and  that  the  schedule  is  otherwise  correct  as  to 
its  statements,  he  shall  notify  said  persons  of  that  fact  of  the  name 
approved  by  him  for  the  association. 

SEC.  9.     And  be  it  further  enacted: 

That  the  persons  uniting  to  form  such  an  association  shall  make  a 
certificate  of  organization,  which  shall  specify: 

First.  — The  name  assumed  by  the  association. 

Second.  — The  place  where  its  operations  of  discount  and  deposit  are  to 
be  carried  on,  designating  the  state,  territory  or  district,  and  also  the 
particular  county  and  city,  town  or  village. 

Third.  — Its  capital  stock,  and  the  number  of  shares  into  which  it  shall 
be  divided. 

Fourth.  — The  names  and  places  of  residence  of  the  shareholders,  and 
the  number  of  shares  held  by  each. 

Fifth.  — An  accurate  copy  of  the  schedule  of  [bonds  or  real  estate 
attached]  to  the  articles  of  association  provided  for  in  section  8. 

Si.,- fit.  — A  declaration  that  said  certificate  is  made  to  enable  such 
persons  to  avail  themselves  of  the  advantages  of  this  act,  and  that  said 
[real  estate  is  for  security  as  required  in  this  act.] 

The  said  certificate  shall  be  duly  signed  and  acknowledged  by  each  of 
said  persons,  in  the  manner  required  by  the  law  of  the  place  for 
acknowledging  conveyances  of  real  estate,  to  entitle  them  to  be  recorded. 
[When  duly  certified  therefor  said  certificate  shall  be  recorded  in  the 
properbook  of  record  of  the  county  or  district  in  which  the  real  estate  is 
situated;  thereafter  no  lien  or  claim  shall  attach  to  any  of  said  real  estate, 
except  such  as  shall  be  wholly  subordinate  to  the  prior  claim  under  said 
certificate  against  said  real  estate  for  the  purposes  of  this  act.]  When 
duly  recorded  the  said  certificate  shall  be  transmitted  to  the  Comptroller 
of  Finance,  who  shall  record. and  carefully  preserve  the  same  in  his  office. 
Copies  of  said  certificate,  duly  certified  by  the  Comptroller  of  Finance  and 
authenticated  by  his  seal  of  office,  shall  be  legal  and  sufficient  evidence  in 
all  courts  and  places  within  the  jurisdiction  of  the  Government  of  the 
United  States  of  the  existence  of  said  association  and  of  every  other  mat- 
ter that  could  be  proved  by  the  production  of  the  original  certificate. 

SEC.  10.     And  be  it  further  enacted: 

[That  no  association  shall  be  organized  hereunder  with  a  "reserve 
security  "  greater  than  one  million  dollars,  or  with  a  less  "reserve  security" 
than  twenty-five  thousand  dollars,  nor  with  a  capital  stock  of  less  than 
fifty  thousand  dollars.] 

SEC.  11.     And  be  it  further  enacted: 

That  whenever  a  certificate  of  organization  has  been  received  and  filed 


28 

by  the  Comptroller  of  Finance,  and  is  found  by  him  to  fully  comply  with 
the  requirements  of  this  act,  the  Comptroller  of  Finance  shall  proceed  to 
investigate  in  the  manner  deemed  best,  the  personal  standing,  financial 
condition  and  record  of  the  persons  seeking  to  form  the  association,  [also 
the  object  of  the  association,  the  location  and  value,  present  and  pros- 
pective, of  the  real  estate  described  in  said  certificate  of  organization,  and 
any  other  facts  that  may  aid  him  in  determining  the  desirability  of  such 
an  association  and  the  probable  safety  of  its  business  affairs  and  manage" 
ment.  The  Comptroller  of  Finance  may  use  such  special  means  as  he 
deems  best  to  safely  ascertain  the  facts  above  refered  to.  When  it  shall 
appear  to  the  satisfaction  of  the  Comptroller  of  Finance  that  the  association 
is  lawfully  entitled  to  commence  the  business  of  banking  with  safety  to 
the  government  and  to  the  people,  he  shall  issue  to  such  association  a 
certificate  under  his  hand  and  official  seal  that  such  association  has  com- 
plied with  all  the  provisions  of  this  act  required  to  be  complied  with,  and 
that  such  association  is  authorized  to  commence  the  business  of  banking, 
designating  the  place  of  business,  fully  naming  the  directors  and  officers 
thereof  for  the  first  year  and  its  capital  stock.  The  said  certificate  shall 
be  published  in  such  local  newspaper  for  sixty  days,  as  the  Comptroller 
of  Finance  shall  designate,  From  the  date  of  said  certificate  said  asso- 
ciation shall  fee  deemed  a  body  corporate  to  transact  the  business  of 
banking  hereunder,  with  the  usual  rights,  powers  and  duties  of  banking 
corporations,  and  shall  exist  for  the  period  of  twenty  years.  An  impress 
of  its  corporate  seal  shall  be  filed  with  the  Comptroller  of  Finance  and 
with  the  Secretary  of  the  Treasury. 

SEC.  12.     And  be  it  further  enacted: 

[That  thereafter,  upon  the  demand  of  said  association,  the  Comptroller  of 
Finance  shall  issue  to  said  association  a  warrant  on  the  Treasury  of  the 
United  States,  for  circulating  notes  of  the  Government  to  the  amount  of 
the  said  average  assessed  value  of  real  estate,  or  the  par  value  of  said 
bonds  deposited  by  said  bank,  or  for  any  part  thereof,  as  demanded  from 
time  to  time,  which  warrants,  upon  presentment  duly  endorsed,  shall  be 
paid  out  of  the  Treasury  in  the  notes  issued  hereunder.  Said  sum  or  any 
part  thereof  may,  on  the  first  of  any  quarter  of  the  year,  be  returned  to 
the  Treasury.] 

SEC.  13.     And  be  it  further  enacted :  • 

That  the  affairs  of  all  associations  for  banking  purposes  formed  here- 
under shall  be  managed  by  its  board  of  directors,  which  may  be  in  legal 
session  on  any  Monday  from  10  A.  M.  wherein  a  quorum  is  present,  and  on 
any  other  day.  where,  after  notice,  a  quorum  may  be  present,  or  to  which 
a  regular  session  may  be  adjourned,  a  quorum  being  present. 

Every  director  shall  be  a  citizen  of  the  United  States  during  his  whole 
term  of  service;  and  at  least  three-fourths  of  the  directors  shall  have  re- 
sided in  the  state  or  territory  or  district  in  which  such  association  is 
located  one  year  next  preceding  their  election  or  appointment  as  directors, 
and  shall  be  residents  thereof  during  their  term  of  office.  Each  director 
shall  own  in  his  own  right  at  least  ten  shares  of  the  capital  stock  of  the 
association.  Each  director,  when  elected  or  appointed,  shall  take  an  oath 


29 

that  he  will,  so  far  as  the  duty  devolves  upon  him,  diligently  and  honestly 
administer  the  affairs  of  such  association,  and  will  not  knowingly  violate, 
or  willingly  permit  to  be  violated,  any  of  the  provisions  of  this  act,  and 
that  he  is  the  bona  fide  owner  in  his  own  right  of  ten  shares  of  the  capital 
stock  of  the  association,  standing  in  his  own  name  on  the  books  of  the 
association,  and  that  the  same  is  not  hypothecated  or  in  any  way  pledged 
as  security  for  any  loan,  debt  or  obligation;  which  oath  subscribed  by 
him  and  duly  certified,  as  required  by  law,  shall  be  immediately  trans, 
mitted  to  the  Comptroller  of  Finance  and  by  him  tiled  and  preserved  in 
his  office. 

SEC.  14    And  be  it  f urth'er  enacted : 

That  the  directors  of  any  association  first  appointed  shall  hold  office 
until  their  successors  shall  be  elected  and  qualified.  All  elections  shall  be 
held  on  the  second  [Tuesday  of  January  of  each  year,]  and  the  directors  as 
elected  shall  hold  their  places  until  their  successors  are  elected  and 
qualified.  Any  vacancy  occuring  by  reason  of  a  director  ceasing  to  own 
the  required  amount  of  stock,  or  from  any  other  cause,  shall  be  filled  by 
appointment  by  the  board.  •  If  from  any  cause  an  election  shall  not  be 
held  at  the  time  designated,  it  may  he  held  on  any  subsequent  day  by 
publishing  thirty  days'  notice  thereof  in  a  local  daily  paper. 

SEC.  15.     And  be  it  further  enacted: 

That  in  all  meetings  of  the  stockholders  each  share  of  stock  shall  be 
entitled  to  one  vote  on  all  questions.  Shareholders  may  vote  by  proxies 
duly  authorized  in  writing.  None  but  shareholders  can  use  or  hold  a 
a  proxy, 

SEC.  16.     And  be  it  further  enacted: 

That  the  shares  of  stock  may  be  transferred  on  the  books  of  the  associa- 
tion in  such  manner  as  may  be  prescribed  in  the  by-laws  of  the  association. 
No  transfer  shall  be  made  of  stock  where  the  holder  is  indebted  to  the 
association  in  any  manner;  but  the  association  has  a  lien  on  all  of  its 
stock  for  such  indebtedness.  Every  perspn  becoming  a  shareholder  by 
transfer,  or  otherwise,  shall,  in  proportion  to  his  shares,  succeed  to  all  the 
rights  and  liabilities  of  the  prior  holder  of  such  shares,  and  no  change 
shall  be  made  in  the  articles  of  association  by  which  the  rights,  remedies 
and  securities  of  the  existing  creditors  of  the  association  shall  be  impaired. 
The  shareholders  of  each  association  formed  under  the  provisions  of  this 
act,  and  of  each  exisiting  bank  or  banking  association  that  may  accept  the 
provisions  of  this  act,  shall  be  held  individually  responsible,  equally  and 
ratably,  and  not  one  for  the  other,  for  all  contracts,  debts  and  engagements 
of  such  associations  to  the  extent  of  the  amount  of  their  stock  therein,  at 
par  thereof,  in  addition  to  the  amount  invested  in  such  shares. 

SEC.  17.     And  be  it  further  enacted: 

That  the  capital  stock  or  the  reserve  security  of  any  association  formed 
hereunder  may  be  increased  or  decreased  within  the  limits  fixed  for  the 
capital  stock  or  [the  reserve  security]  by  this  act  by  a  two-thirds  vote  of 
its  shareholders  at  any  annual  meeting  in  January.  The  increase  or  der 


30 

crease  of  capital  stock  or  the  [reserve  security]  shall  be  made  by  complying 
with  the  requirements  of  this  act  as  to  the  formation  of  such  associations 
in  the  first  instance,  and  by  complying  with  such  additional  requirements 
as  the  Comptroller  of  Finance  may  deem  best  to  secure  the  interests  of 
all  parties  concerned,  provided  [that  in  the  decrease  of  the  reserve  security 
the  association  so  decreasing  its  reserve  security  shall  surrender  to  the 
Comptroller  of  Finance  circulating  notes  received  thereon  to  the  amount 
of  the  decrease.  In  such  cases  the  Comptroller  of  Finance  may,  in  his 
discretion,  release  from  the  effect  of  this  act  a  pro  rata  of  the  bonds  or 
real  estate  described  in  the  certificate  of  organization,  but  this  shall  only 
be  done  in  cases  where  the  Comptroller  of  Finance  shall  find  the  asso- 
ciation to  be  solvent.  The  maximum  or  minimum  of  such  increase  or 
decrease  shall  be  determined  by  the  Comptroller  of  Finance.] 

Any  association  organized  hereunder  may  close  up  its  business  and  dis- 
solve its  organization  by  a  vote  of  its  stockholders  had  at  the  annual 
meeting'  in  January.  In  such  cases  the  association  must  first  settle  all 
of  its  outstanding  obligations  and  return  to  the  Comptroller  of  Finance 
the  circulating  notes  received  on  its  reserve  security.  The  Comptroller  of 
Finance,  upon  receipt  of  a  statement  of  the  foregoing  facts  duly  authen- 
ticated by  the  directors  of  said  association  under  oath,  shall  fully  inves- 
tigate the  matters  pertaining  thereto;  and  upon  being  satisfied  that  all 
obligations  of  said  association  are  fully  satisfied  and  discharged,  shall 
cause  said  statement  to  be  published  for  at  least  sixty  days  in  a  local 
newspaper,  and  shall  also  cause  a  notice  thereof  to  be  inserted  in  the 
[United  States  Bulletin  of  Finance]  for  the  same  period.  If  any  objections 
to  the  dissolution  are  filed  with  the  Comptroller  of  Finance  before  the 
expiration  of  said  sixty  days,  he  shall  determine  and  adjust  any  matters 
therein  objected  to;  when  so  adjusted,  or  if  no  objections  are  filed  with 
him,  he  shall  issue  a  certificate  dissolving  said  association  and  releasing 
the  bonds  or  real  estate  described  in  the  certificate  of  organization  from 
any  further  claim  or  demand  thereon.  Said  certificate  of  dissolution 
shall  be  by  him  duly  signed,  sealed  and  acknowledged  so  as  to  entitle  the 
same  to  record  in  the  office  where  the  certificate  of  organization  was 
recorded.  The  Comptroller  of  Finance  shall  duly  record  said  certificate 
of  dissolution  in  his  office,  and  thereafter  shall  transmit  the  same  to  said 
association  upon  the  same  being  duly  recorded  in  the  office  where  the 
certificate  of  organization  was  recorded.  The  association  will  thereby  be 
completely  dissolved. 

SEC.  18.     And  be  it  further  enacted: 

[That  if  at  any  time  the  value  of  the  real  estate  described  in  the  certifi- 
cate of  organization  shall  depreciate  in  value,  to  be  decided  by  the  Comp- 
troller of  Finance,  he  may  require  any  portion  of  the  circulating  notes  of 
the  association's  reserve  security  to  be  surrendered  to  the  Comptroller  of 
Finance,  or  he  may  require  further  real  estate  security  as  in  the  original 
formation  of  the  association.]  Should  the  Comptroller  of  Finance  at  any 
time  deem  the  affair  of  said  association  unsafe  from  any  cause,  he  may 
appoint  a  special  agent  or  agents  under  his  hand  and  seal  of  office,  who 
shall  have  power  to  inspect  all  affairs  of  said  association  and  to  close  up  its 
affairs  to  the  best  possible  advantage  to  all  parties  interested.  To  this  end 


31 

lie  shall  have  power  to  bring  or  defend  any  suit  in  the  name  of  the  association, 
and  to  sell  at  public  or  private  sale  any  or  all  of  the  real  estate  described 
in  the  certificate  of  organization,  and  to  execute  proper  conveyances 
thereof,  and  use  the  proceeds  to  close  up  the  affairs  of  the  association. 
He  shall  also  have  power  to  collect  from  the  stockholders  the  amount  for 
which  they  are  responsible  under  this  act,  and  to  use  the  same  to  close  up 
the  accounts.  He  shall  give  such  bonds  for  faithful  performance  of  his 
duties  hereunder  as  the  Comptroller  of  Finance  may  require.  His  certifi- 
cate of  appointment  shall  be  duly  acknowledged  and  recorded  as  the 
other  certificates  are  required  to  be.  The  Government  shall  be  a  preferred 
creditor  in  all  such  cases  as  are  provided  for  in  this  section. 

SEC.  19.     And  be  it  further  enacted: 

That  the  directors  may  semi-annually  declare  dividends  from  the  net 
profits  of  the  association,  but  such  association  before  it  shall  declare  a 
dividend  shall  carry  at  least  ten  per  cent  of  its  net  profits  to  a  reserve 
fund  until  said  reserve  fund  shall  equal  the  capital  stock  of  said  association. 

SEC.  20.     And  be  it  further  enacted: 

That  it  shall  be  lawful  for  any  association  hereunder  to  purchase,  hold 
and  convey  real  estate  as  follows: 

First. — Such  as  shall  be  necessary  for  its  immediate  accommodation  in 
the  transaction  of  its  business  and  [for  its  reserve  security.] 

Second. — Such  as  shall  be  mortgaged  to  it  in  good  faith  by  way  of 
security  for  debts  previously  contracted  or  [for  loans  made  thereon.] 

Third. — Such  as  shall  be  conveyed  to  it  in  satisfaction  of  debts  pre- 
viously incurred  in  the  course  of  its  dealings. 

Fourth. — Such  as  it  shall  purchase  at  sales  under  judgments,  decrees, 
or  mortgages  held  by  the  association,  or  shall  purchase  to  secure  debts 
due  to  said  association 

Such  association  shall  not  purchase  or  hold  real  estate  for  any  other 
purpose  than  as  herein  specified.  Provided  that  all  such  real  estate  ac- 
quired other  than  for  the  purpose  of  the  business  of  the  association  shall 
be  sold  within  five  years  after  it  is  obtained  by  the  association 

SEC.  21.    And  be  it  further  enacted: 

That  each  association  may  charge  such  rates  of  interest  as  may  be 
allowed  by  local  laws  where  the  association  is  situated.  Each  association 
shall  keep  on  hand  in  cash  an  amount  equal  to  at  least  twenty-five  per 
cent  of  the  amount  of  its  deposits,  when  the  reserve  amount  shall  fall 
below  said  percentage.  No  more  dividends  or  loans  shall  be  made  until 
the  amounts  called  in  shall  restore  the  said  percentage. 

SEC.  22.     And  be  it  further  enacted: 

That  every  association  hereunder  shall  make  to -the  Comptroller  of 
Finance  a  report,  according  to  the  form  which  may  be  prescribed  by  him, 
verified  by  the  oath  or  affirmation  of  the  president  or  cashier  of  such  as- 
sociation, which  report  shall,  among  other  things,  exhibit  in  detail,  and 
under  appropriate  heads,  the  resources  and  liabilities  of  the  association, 
and  |  the  last  assessment  valuation  of  its  real  estate,]  bef ore  the  com- 


32 

mencement  of  business  on  the  morning  of  the  first  Monday  of  the  months 
of  January,  April,  July  and  October  of  each  year,  and  shall  transmit  the 
same  to  the  Comptroller  of  Finance  within  five  days  thereafter.  And  any 
bank  failing  to  transmit  such  report  shall  be  subject  to  a  penalty  of  one 
thousand  dollars  for  each  day  after  said  five  days  that  said  report  is  delayed 
beyond  that  time.  The  Comptroller  shall  cause  abstracts  of  said  reports  to 
be  published  in  the  United  States  Bulletin  of  Finance,  and  the  separate  re- 
port of  each  association  shall  be  published  by  the  association  in  a  local  daily 
newspaper  for  at  least  one  week.  [Said  association  shall  forward,  with 
each  quarterly  report,  one-half  (J)  of  one  per  cent,  of  the  cash  used  on  its 
reserve  security,  during  the  preceding  quarter,  as  interest  thereon,  on 
sums  not  to  exceed  $100,000,  and  three-fourths  of  one  per  cent,  per  quarter 
on  sums  in  excess  of  $100,000  and  less  than  $200,000;  thereafter  the  rate 
shall  increase  one-fourth  of  one  per  cent,  per  quarter  additional  on  each 
additional  $100,000  used  or  on  any  part  thereof;]  and  in  case  of  default  in 
the  payment  thereof,  by  any  association,  said  interest  may  be  collected 
in  the  manner  provided  for  the  collection  of  United  States  duties  of  other 
corporations.  In  addition  to  the  quarterly  reports  required  herein,  every 
association  shall,  on  the  first  Tuesday  of  each  month,  make  to  the  Comp- 
troller of  Finance  a  statement  under  oath  of  the  president,  or  the  cashier, 
showing  the  condition  of  the  association  making  such  statement,  in 
respect  to  the  average  amount  loans  and  discounts,  specie  and  circulating 
notes  on  hand  belonging  to  the  association,  Clearing  House  certificates., 
deposits,  and  such  other  matters  as  the  Comptroller  of  Finance  may, 
require. 

SEC.    23.     And  be  it  further  enacted: 

That  no  association  shall  make  loans  or  discount  on  the  security  of  the 
shares  of  its  own  capital  stock,  nor  be  the  purchaser  or  holder  of  any  such 
shares  unless  such  security  or  purchase  shall  be  necessary  to  prevent  loss 
upon  a  debt  previously  contracted  in  good  faith;  and  stock  so  purchased 
or  acquired  shall  be  sold  within  six  months  from  the  time  of  its  purchase- 
But  no  such  purchase  or  sale  shall  relieve  the  former  owner  thereof  from 
his  pro  rata  of  responsibility  for  all  debts  incurred  by  the  association 
prior  to  sale  and  transfer  to  a  new  purchaser  in  good  faith. 

SEC.     24.     And  be  it  further  enacted: 

That  no  association,  or  any  member  thereof,  shall,  during  the  time  it 
shall  continue  its  banking  operations,  withdraw,  or  permit  to  be  with- 
drawn, either  in  the  form  of  dividends  or  otherwise,  any  portion  of  its 
capital  or  reserve  fund.  And  if  any  losses  shall  at  any  time  have  been 
sustained  by  any  such  association,  equal  to  or  exceeding  its  undivided 
profits  then  on  hand  in  cash,  no  dividend  shall  be  made;  and  no  dividend 
shall  ever  be  made  by  any  association,  while  it  shall  continue  its  banking 
operations,  to  an  amount  greater  than  its  net  profits  then  on  hand,  de- 
ducting therefrom  its  losses  and  bad  debts  and  ten  per  cent  for  the 
reserve  fund.  And  all  debts  due  any  association,  on  which  the  interest  is 
past  due  and  unpaid  for  a  period  of  six  months,  unless  the  same  shall  be 
well  secured  and  shall  be  in  process  of  collection,  shall  be  considered  bad 
debts  within  the  meaning  of  this  act. 


SEC.     25.     And  be  it  further  enacted : 

That  the  president  and  cashier  of  every  such  association  shall  cause  to 
be  kept  at  all  times  a  full  and  correct  list  of  the  names  and  residences  of 
all  the  shareholders  in  the  association,  and  the  number  of  shares  held  by 
each,  in  the  office  where  its  business  is  transacted  ;  and  such  list  shall  be 
subject  to  public  inspection  during  business  hours  of  each  day  in  which 
business  may  be  legally  transacted.  A  copy  of  said  list  shall  be  sent  with 
each  quarterly  report  to  the  Comptroller  of  Finance. 

SEC.    26.     And  be  it  further  enacted : 

[That  the  directors  of  any  bank  incorporated  under  any  national  or 
state  law  may,  upon  the  authorization  of  the  owners  of  two-thirds  the  cap- 
ital stock,  in  writing,  duly  signed  and  acknowledged,  avail  themselves  of 
the  provisions  of  this  act  and  become  a  national  association  under  their 
corporate  name  by  complying  with  the  provisions  of  this  act.]  The  said 
directors  being  by  said  vote  authorized  to  execute  all  papers  relating 
thereto.  Any  matters  not  herein  provided  for  in  such  cases  shall  be  ad- 
justed by  the  Comptroller  of  Finance  in  accordance  with  the  spirit  and 
intention  of  this  act. 

SEC.     27.     And  be  it  further  enacted: 

That  all  associations  under  this  act,  when  designated  for  that  purpose 
by  the  Secretary  of  the  Treasury,  shall  be  depositaries  of  public  money, 
except  receipts  from  customs,  under  such  regulations  as  may  be  prescribed 
by  the  Secretary;  and  they  may  also  be  employed  as  financial  agents  of 
the  Government;  and  they  shall  perform  all  such  reasonable  duties,  as 
depositaries  of  public  moneys  and  financial  agents  of  the  Government,  as 
may  be  required  of  them.  And  the  Secretary  of  the  Treasury  shall  re- 
quire of  the  association  thus  designated,  satisfactory  security  for  the 
safe  keeping  and  prompt  payment  of  public  funds  deposited  with  them, 
and  for  the  faithful  performance  of  their  duties  as  financial  agents  of 
the  Government. 

SEC.     28.     And  be  it  further  enacted : 

That  all  transfers  of  the  assets  or  any  part  thereof,  of  any  association 
doing  business  hereunder,  made  after  the  commission  of  an  act  of  insol- 
vency, or  in  comtemplation  thereof,  with  a  view  to  prevent  the  application 
of  it  as  assets  in  the  manner  prescribed  in  this  act,  or  with  a  view  to  the 
preference  of  one  creditor  to  another,  shall  be  utterly  null  and  void. 

SEC.     29.     And  be  it  further  enacted : 

That  any  director,  officer  or  employee,  of  any  association  organized 
hereunder,  who  shall  knowingly  violate,  or  permit  any  of  such  persons  to 
violate  the  provisions  of  this  act,  shall  be  removed  forthwith  from  his 
position,  by  the  proper  authority  of  the  association,  or  by  order  of  the 
Comptroller  of  Finance.  And  any  director,  officer  or  employee  of  such 
association  who  shall  so  transact  the  business  of  such  association,  or  any 
part  of  it,  as  to  intentionally  defraud  the  association  or  any  one  else,  or 
with  the  intention  to  deceive  or  mislead  any  officer  of  the  association,  or 
any  agent  appointed  to  examine  the  affairs  of  such  association,  shall  be 


34 

deemed  guilty  of  a  misdemeanor,  and  upon  conviction  thereof  shall  be 
punished  by  imprisonment  for  nor  more  than  ten  years. 

SEC.    30.     And  be  it  further  inacted: 

That  all  suits  and  proceedings  arising  out  of  the  provisions  of  this  act, 
in  which  the  United  States  or  its  agents  or  officers  shall  be  parties,  shall 
be  conducted  by  the  district  attorneys  of  the  several  districts,  under  the 
direction  and  supervision  of  the  Solicitor  of  the  Treasury,  And  that  all 
suits  or  actions  arising  under  the  provisions  of  this  act,  may  be  had  in 
any  circuit,  district  or  territorial  court  of  the  United  States  held  within 
the  district  in  which  the  association  may  be  established,  or  in  any  state, 
county  or  municipal  court  in  the  jurisdiction  of  which  said  association  is 
established,  which  has  jurisdiction  in  similar  cases. 

SEC  .     31.     And  be  it  further  enacted : 

That  if  any  person  shall  falsely  make,  forge  or  counterfeit,  or  cause  or 
procure  to  be  made,  forged  or  counterfeited,  or  willing  aids  or  assists  in 
forging  or  counterfeiting  any  note  in  imitation  of,  or  purporting  to  be  in 
imitation  of  the  circulating  notes  issued  under  the  provisions  of  this  act, 
or  shall  pass,  utter  or  publish,  or  attempt  to  pass,  utter  or  publish,  any 
false,  forged  or  counterfeited  note  purporting  to  be  issued  under  the  pro- 
visions of  this  act,  knowing  the  same  to  be  falsely  made,  forged  or  counter- 
feited, or  shall  falsely  alter,  or  cause  or  procure  to  be  falsely  altered,  or 
willingly  aids  or  assists  in  falsely  altering  any  such  circulating  notes 
issued  under  the  provisions  of  this  act,  or  shall  pass,  utter  or  publish,  or 
attempt  to  pass  utter  or  publish  as  true,  any  falsely  altered  or  spurious 
circulating  notes  issued,  or  purporting  to  have  been  issued  under  the  pro- 
visions of  this  act,  knowing  the  same  to  be  falsely  altered  or  spurious, 
every  such  person  shall  be  deemed  and  adjudged  guilty  of  a  felony,  and 
being  thereof  convicted  shall  be  sentenced  to  be  imprisoned  and  kept  at 
hard  labor  for  a  period  of  not  less  than  five  years  nor  more  than'  twenty 
years,  and  fined  in  a  sum  not  exceeding  one  thousand  dollars. 

SEC.  32.     And  be  it  further  enacted: 

That  if  any  person  shall  make  or  engrave,  or  cause  or  procure  to  be  made 
or  engraved,  or  shall  have  in  his  custody  or  possession  any  plate,  die  or 
block  after  the  similitude  of  any  plate,  die  or  block  from  which  any  circu- 
lating notes  issued  as  aforesaid  shall  have  been  prepared  or  printed,  with 
intent  to  use  such  plate,  die  or  block,  or  cause  or  suffer  the  same  to  be 
used  in  forging  or  counterfeiting  any  of  the  notes  issued  as  aforesaid,  or 
shall  have  in  his  custody  or  possession  any  blank  note  or  notes  engraved 
and  printed  after  the  similitude  of  any  notes  issued  as  aforesaid  with 
intent  to  use  such  blanks,  or  cause  or  suffer  the  same  to  be  used  in  forging 
or  counterfeiting  any  of  the  notes  issued  as  aforesaid,  or  shall  have  in  his 
custody  or  possession  any  paper  adapted  to  the  making  of  such  notes,  and 
similar  to  the  paper  upon  which  any  such  notes  shall  have  been  issued, 
with  intent  to  use  such  paper,  or  cause,  or  suffer  the  same  to  be  used  in 
forging  or  counterfeiting  any  of  the  notes  issued  as  aforesaid,  every  such 
person,  being  thereof  convicted  by  due  course  of  law,  shall  be  sentenced  to 


35 

be  imprisoned  and  kept  at  hard  labor  for  a  term  not  less  than  five  or  more 
than  twenty  years,  and  fined  in  a  sum  not  exceeding  one  thousand  dollars. 

SEC.  33.     And  be  it  further  enacted: 

[That  the  Comptroller  of  Finance  shall  cause  to  be  prepared  each 
month  concise  information  showing  the  amount  of  circulating  notes  issued 
during  the  preceding  month,  and  the  approximate  amount  of  circulating 
notes,  gold  and  silver  coin,  in  each  state,  territory,  district,  and  in  the  prin- 
cipal cities  of  the  United  States,  and  also  the  amount  in  the  various  vaults 
or  Treasuries  of  the  United  States.  Also  the  amounts  expended  by  the 
Government  in  each  state,  territory  or  district.  It  shall  also  contain  the 
name  of  each  bank,  the  amount  of  its  capital  stock,  its  reserve  fund,  and 
its  lossfts  for  the  preceding  month,  and  such  other  information  as  shall  be 
deemed  of  sufficient  value  to  the  financial  interest  of  the  people  to  be 
published.  Such  information  shall  be  published  monthly  by  the  Depart- 
ment of  Printing  in  pamphlet  form,  of  convenient  size  for  permanent 
binding  in  book  form.  One  copy  of  each  issue  shall  be  sent  monthly  to 
each  of  the  following  parties:  To  each  association  doing  business  here- 
under,  to  the  President  and  each  member  of  his  Cabinet,  to  each  member 
of  Congress,  and  to  such  other  officers  of  the  Government  as  the  Comp- 
troller of  Finance  may  direct.  Also  to  the  Governor  of  each  state,  terri- 
tory or  district,  and  to  each  public  library,  university  or  college  applying 
therefor.  Any  person  may  have  a  copy  forwarded  to  his  address  for  one 
year  by  first  forwarding  to  the  Comptroller  of  Finance  the  sum  of  one 
dollar.  All  subscriptions  shall  end  with  the  December  number  of  each 
year.  Subscriptions  made  during  the  year  shall  be  at  the  rate  of  ten  cents 
per  copy  for  the  remaining  months  of  the  year.  ] 

SEC.  34.     And  be  it  further  enacted: 

[That  as  the  circulating  medium  shall  accumulate  in  the  Treasury  of  the 
Government  from  revenue  or  otherwise,  it  shall  be  returned  to  circulation 
among  the  people  in  addition  to  the  ways  hereinbefore  specified,  by  pay- 
ing the  current  expenses  of  the  Government;  by  the  purchase  of  suitable 
grounds  and  the  erection  thereon  of  suitable  buildings  for  post  offices  and 
other  uses  of  the  Government;  by  the  construction  of  such  other  works  as 
shall  be  deemed  by  Congress  for  the  best  interests  of  the  public.  The 
expenditures  shall  be  made  annually,  in  each  state,  territory  or  district  as 
nearly  as  may  be,  in  proportion  to  the  number  of  its  inhabitants,  provided 
that  states  already  supplied  with  public  buildings  shall  not  receive  addi- 
tional expenditures  until  the  other  states,  territories  or  districts  shall 
have  had  their  equal  proportions.  All  public  work  shall  be  done  by  day's 
labor,  at  the  rate  of  one  dollar  and  fifty  cents  per  day  for  eight  hours  work 
for  common  labor.  A  less  rate  shall  be  paid  where  the  laborer  is  not  able  to 
perform  a  reasonable  day's  work.  The  expenditures  hereunder  shall  be 
as  directed  from  time  to  time  by  Congress.] 

SEC.     35.     And  be  it  further  enacted: 

That  all  notes  issued  hereunder  and  all  moneys  received  by  the  Comp- 
troller of  Finance  hereunder  shall  be  deposited  in  the  Treasury  of  the 
United  States.  And  the  Comptroller  of  Finance  shall  keep  an  itemized 
account  of  the  sources  from  which  received,  with  the  dates  thereof. 

SEC.     36.    And  be  it  farther  enacted: 

[That  all  improvements  on  property  described  in  the  certificate  of 
organization  shall  be  kept  insured  by  the  association  to  the  full  amount  of 
its  assessed  value,  payable  to  the  Comptroller  of  Finance,  and  all  insur- 
ances on  such  property,  in  whatever  name  insured,  shall,  in  case  of  loss, 


36 


be  paid  by  the  insurance  company  to  the  Comptroller  of  Finance,  to  be  by 
hi_a  disposed  of,  with  the  consent  of  the  Secretary  of  the  Treasury,  as 
they  may  deem  best  in  the  interest  of  the  various  parties  concerned.] 

SEC.     37.     And  be  it  further  enacted: 

That  it  shall  be  unlawful  for  any  officer  acting  under  the  provisions  of 
this  act  to  countersign  or  deliver  to  any  association,  or  to  any  other  com- 
pany or  person,  any  circulating  notes  contemplated  by  this  act,  except 
as  herein  provided,  and  in  accordance  with  the  true  intent  and  meaning 
of  this  act.  And  any  officer  who  shall  violate  the  provisions  of  this  section 
shall  be  deemed  guilty  of  a  high  misdemeanor,  and  on  conviction  thereof 
shall  be  punished  by  a  fine  not  exceeding  double  the  amount  so  counter- 
signed and  delivered,  and  imprisoned  for  not  less  than  one  year  and  for 
not  exceeding  fifteen  years. 

SEC.     38.     And  be  it  further  enacted: 

That  if  the  directors  of  any  association  shall  knowingly  violate,  or 
knowingly  permit  any  of  the  officers,  agents  or  servants  of  the  association 
to  violate  any  of  the  provisions  of  this  act,  all  the  rights,  privileges  and 
franchises  of  the  association  derived  from  this  act  shall  be  thereby  for- 
feited. Such  violation  shall  be  first  determined  and  adjudged  by  a  proper 
circuit,  district,  or  territorial  court  of  the  United  States,  in  a  suit  brought 
for  that  purpose  in  the  name  of  the  Comptroller  of  Finance,  which  decree 
shall  adjudge  the  association  dissolved.  Thereupon  the  affairs  of  the 
association  shall  be  closed  up  by  the  Comptroller  of  Finance,  and  in  case 
of  such  violation,  every  director  who  participated  in  or  assented  to  the 
same  shall  be  held  liable  in  his  personal  and  individual  capacity  for  all 
damages  which  the  association,  its  shareholders,  or  any  other  person  shall 
have  sustained  in  consequence  of  such  violation.  Such  directors  shall 
thereafter  be  disqualified  for  the  office  of  director  in  any  association 
formed  her eunder ;  and  any  president,  director,  cashier,  teller,  clerk  or 
agent  of  any  association  who  shall  embezzle,  abstract  or  wilfully  misapply 
any  of  the  moneys,  funds  or  credits  of  the  association,  or  shall,  without 
authority  from  the  directors,  issue  or  put  forth  any  certificate  of  deposit, 
draw  any  order  or  bill  of  exchange,  make  any  acceptance,  assign  any  note 
bond  or  draft,  bill  of  exchange,  mortgage,  judgment  or  decree,  or  shall 
make  any  false  entry  in  any  book,  report  or  statement  of  the  association, 
with  intent  in  either  case  to  injure  or  defraud  the  association,  or  anv  other 
company,  body  politic  or  corporate,  or  any  individual  person,  or  to  deceive 
any  officer  of  the  association,  or  any  agent  apointed  to  examine  the  affairs 
of  any  such  association,  shall  be  deemed  guilty  of  a  misdemeanor,  and 
upon  conviction  thereof  shall  be  punished  by  imprisonment  not  less  than 
one  and  not  more  than  ten  years. 

SEC.  39.     And  be  it  further  enacted: 

That  the  Comptroller  of  Finance,  with  the  approbation  of  the  Secretary 
of  the  Treasury,  as  often  as  shall  be  deemed  necessary  or  proper,  shall 
appoint  a  suitable  person  or  persons  to  make  an  examination  of  the  affairs 
of  very  banking  association  formed  hereunder,  which  person  or  peions 


37 


shall  not  be  a  director  or  other  officer  or  employee  in  any  association 
whose  affairs  he  shall  be  appointed  to  examine,  and  who  shall  have 
power  to  make  a  thorough  examination  into  all  the  affairs  of  the 
association,  and,  in  doing  so,  to  examine  any  of  the  officers 
and  agents  thereof  on  oath,  and  shall  make  a  full  detailed 
report  of  the  condition  of  the  association  to  the  Comptroller. 
And  the  association  shall  not  be  subject  to  any  other  visitorial  powers 
than  such  as  are  authorized  by  this  act,  except  such  as  are  vested  in  the 
several  courts  of  law  and  chancery.  And  every  person  appointed  to  make 
such  examination  shall  receive  for  his  services  at  the  rate  of  five  dollars 
for  each  day  employed  by  him  in  such  examination,  and  two  dollars  for 
each  twenty-five  miles  he  shall  necessarily  travel  in  the  performance  of 
his  duty. 

SEC.  40.     And  be  it  further  enacted: 

That  persons  holding  stock  as  executors,  guardians,  administrators  or 
trustees  shall  not  be  personally  subject  to  any  liabilities  as  stockholders, 
but  the  estates  and  funds  in  their  hands  shall  be  liable  in  like  manner 
and  to  the  same  extent  as  the  testator,  intestate,  ward,  or  person  interested 
in  said  trust  funds  would  be  if  they  were  respectively  living  and  competent 
to  act  and  hold  the  stock  in  their  own  names. 

SEC.  41.     And  be  it  further  enacted: 

[That  hereafter  no  national  associations  for  the  purpose  of  banking 
shall  be  formed  except  under  the  provisions  of  this  act,  and  all  banking  in- 
stitutions now  under  the  provisions  of  prior  acts  of  Congress  shall  be 
allowed  to  continue  under  such  acts  until  their  proper  term  of  existence 
has  expired.] 

SEC.  42.     And  be  it  further  enacted: 

[That  the  present  Comptroller  of  Currency  shall  hereafter  be  known  as 
tho  Comptroller  of  Finance,  under  this  act,  and  under  such  name,  shall 
with  the  bureau  now  established,  perform  all  duties  required  under  tho 
various  acts  of  Congress  relating  to  currency  or  a  circulating  medium  ] 

SEC.  43.     And  be  it  further  enacted: 

That  all  acts  or  parts  of  an  act  in  conflict  with  the  provisions  of  this 
act  are  hereby  repealed,  and  Congress  may  at  any  time  amend,  alter  or 
repeal  this  act. 


39 


INDEX 

A  Corner  on  Money 3 

A  Political  Forecast 3 

The  Stringency  of  Money 4 

The  Crash  for  Want  of  Money 4 

The  Financial  Situation.. ., 5 

Stringency  More  Apparent  5 

A  Glut  of  $20,000,000 6 

The  Financial  Vacuum 6 

The  Demand 7 

Growth  of  Civilization 7 

International  Demand 8 

Call  Loans 8 

Volume  Required 9 

Not  Enough  Gold  and  Silver „ 10 

What  is  the  Remedy 10 

Not  Free  Coinage     10 

Free  Coinage  not  an  Issue 11 

Fifty  Year  2  per  cent  Bonds 12 

Clearing  House   Plan 12 

Farmers'  Aliance  Scheme 13 

Suggested  Legislature 14 

A  Constitutional  Amendment  Needed  14 

Proposed  Amendment 15 

As  GOOD  AS  GOLD 16 

Gold  and  Silver  Basis 17 

An  Act  of  Congress 17 

Proposed  Legislation 17 

Copy  of  Proposed  Bill 23 


40 


Los  ANGELES,  JUNE,  1891. 
The  actual  volume  of  money  in  the  United  States  is : 

Gold $694,869,680 

Silver 485,370,397 

Legal  tender  paper  renewed 420,272,225 


$1,600,512,402 

Senator  Stewart  says  in  the  June  Forum,  "The  addition  to  our  circu- 
lating medium  up  to  the  present  time  which  free  coinage  would  have 
caused  could  not  have  exceeded  fifteen  million  dollars;"  and  "The  most 
serious  objection  to  metallic  money  is  the  want  of  a  sufficient  supply." 

Free  coinage  is  only  a  drop  in  the  bucket,  and  can  never  replace  the 
necessity  of  a  vast  volume  of  paper  money,  which  is  now  over  $420,000,000 
unsecured. 

The  only  sufficient  and  safe  system  is  to  place  all  of  the  above  gold  and 
silver,  and  all  other  real  and  personal  property  in  the  United  States 
(pledged  by  a  constitutional  amendment)  back  to  an  issue  of  say  $2,500,- 
000,000,  interchangeable  legal  tender  money,  issued  under  a  uniform 
system  for  the  benefit  of  all,  and  free  from  the  monopoly  of  any  set  of 
men  or  corporations. 

The  need  of  the  hour  is  courageous  statesmen  who  will  give  the  United 
States  the  best  money  system  possible,  free  from  all  rings,  large  or  small. 


A  PROPOSED  NATIONAL  MONEY  SYSTEM 


EMBRACING 

GOLD,  SILVER,  AND  A  CURRENCY 
AS  GOOD  AS  GOLD. 

BASED  ON  THE  WHOLE  WEALTH  OF  THE  NATION,  ISSUED  BY  AUTHOR- 
ITY OF  THE  PEOPLE,  AND  ADMINISTERED  FOR  THE  COMMON  GOOD.  BEING 
AN  ISSUE  OF  ABOUT  TWO  CENTS  ON  THE  DOLLAR  OF  OUR  NATION,Al 
WEALTH.  SECURED  BY  A  CONSTITUTIONAL  AMENDMENT. 

NO  INFLATION, 

NO  CONTRACTION, 
NO  REPUDIATION, 

NO  DEBASEMENT  OF  COINS, 
NO  DEMONETIZATION  of 
GOLD, 

SILVER  or 

CURRENCY. 

ELASTICITY  AND  VOLUME  TO  MEET  ALL  LEGITIMATE  DEMANDS.  EM- 
BRACING THE  BEST  FEATURES  OF  THE  UNITED  STATES,  ENGLISH, 
GERMAN  AND  FRENCH  FINANCES.  PROVIDING  A  SOUND  SYSTEM  OP  BANK- 
ING UNDER  NATIONAL  LAWS. 

WITH  FULL  TEXT  OF  A  PROPOSED  CONSTITUTIONAL  AMENDMENT  AND 
BILL  FOR  CONGRESS. 


FROM   AN  ADDRESS   DELIVERED   IN  SAN   FRANCISCO,  OCTOBER  16,   1891, 

By  R.  M.  WIDNEY,  LL.  D.,  President 
Of  the  University  Bank  of  Los  Angeles,  California. 


FOR  COPIES  OF  THIS  PAMPHPET  ADDRESS  THE  UNIVERSITY  BANK,  Los  ANGELES. 


THE    LATE    SENATOR     PLUMB    CHANGED     HIS    FINANCIAL 

VIEWS. 

"PACIFIC  LAND  IMPROVEMENT  COMPANY, 

Los  ANGELES,  Cal.,  May  i,  1891. 
"JUDGE  R.  M.  WIDNEY  : 

"Dear  Sir—  Herewith  I  beg  to  hand  you  the  letter  that  I  spoke  to  you  about,  which  I  re- 
ceived from  Senator  Plumb,  in  answer  to  one  sent  him  by  me  in  reference  to  your  proposed 
bill  for  a  National  circulating  medium. 

"  Very  respectfully  yours, 

"  A.  P.  MAGINNIS."  * 

"  UNITED  STATES  SENATE, 

WASHINGTON,  D.  C.,  March  21,  1891. 
•"A.  P.  MAGINNIS,  Esq.,  Los  Angeles,  Cal.: 

'"My  Dear  Sir — I  am  in  due  receipt  of  your  favor  of  the  3rd.,  covering  pamphlet  in  rela- 
tion to  the  measure  proposed  by  Judge  Widney  with  reference  to  a  National  circulating  me- 
dium. No  suggestion,  however  valuable,  which  involves  a  complete  overturning  of  existing 
systems,  will  ever  be  adopted.  The  American  people  are  conservative.  The  men  whom  they 
send  here  to  represent  them  haye  widely  different  views,  and  if  any  progress  at  all  is  made  it 
will  be  by  slow  degrees.  Some  day  I  shall  look  over  the  plan  proposed,  with  a  view  to  a  more 
definite  consideration  of  its  merits.  But  there  is  one  part  of  it  which  can  never  under  any  cir- 
cumstances meet  my  views,  and  that  is  a  maintenance  of  a  gold  standard.  No  amount  of 
paper  money  based  upon  gold  redemption  can  ever  have  any  final  result  except  one  of  disaster. 
The  greater  the  issue  of  paper  money  the  greater  the  trouble  which  will  finally  ensue.  It  will 
be  an  anomalous  condition  of  things  indeed  if,  just  as  England  is  seriously  thinking  of  coming 
to  bi-metalism,  the  United  States  should  take  a  back  track  in  the  direction  of  mono-metalism. 

"Truly  yours, 

"PRESTON  B.  PLUMB." 

PLUMB'S  PREDICTION,  1892 — REMARKABLE  LETTER  WRITTEN  BY  THE  SEN- 
ATOR,  JUST  BEFORE  HIS  DEATH. 

LEAVENWORTH,  Kan.,  January  17. 

The  Times  today  publishes  a  letter  written  by  the  late  Senator  Plumb,  just  before  his  death, 
to  that  paper.  In  it  he  said  that  he  was  glad  the  Times  was  continuing  to  discuss  financial 
questions.  "There  is  abundance  of  evidence,"  he  wrote,  "that  this  question  is  coming  to  the 
.front  in  a  National  way.  In  fact,  the  feeling  is  very  strong  to  shift  the  issue  from  tariff  to 
currency.  Something  will  happen  one  of  these  days  which  will  open  the  eyes  of  a  good  many 
people.  Before  this  Congress  is  over,  m  my  judgment,  you  will  find  a  large  majority  of  Re- 
publicans, perhaps  all,  voting  for  a  much  more  comprehensive  measure  in  the  direction  of  en- 
larging the  currency  than  was  ever  yet  proposed."—^  the  Associated  Press. 


STEREOTYPED  AND  PRINTED 

BY  THE 

TIMES-MIRROR   PRINTING   AND   BINDING   HOUSE 
LOS  ANGELES 


PREFACE. 


This  financial  question  has  the  attention  of  the  Nation. 

Congress  is  the  Nation's  jury.  The  people  are  arguing  theories  and 
suggesting  remedies,  collecting  statistics  and  drawing  conclusions.  The 
xrase  is  being  argued  by  farmers,  mechanics,  tradesmen,  laborers,  bankers, 
professors,  statesmen,  money  lenders,  money  users;  by  men  interested  in 
selfish  schemes  of  finances,  and  by  philanthropists.  All  classes  are  show- 
ing how  they  are  affected  and  what  would  be  the  remedy  for  them. 

Never  before,  and  probably  never  again,  will  this  question  be  so 
exhaustively  analyzed  and  understood  as  in  the  present  controversy. 

This  will  be  the  occasion  for  Congress  to  give  the  Nation  a  system  of 
finances  more  perfect  than  any  nation  has  ever  yet  had ;  one  that  will  in 
safety  and  abundantly  meet  the  wants  of  the  people,  in  justice  and  equity 
to  all,  for  centuries  to  come. 

In  the  following  pages  we  briefly  discuss  most  of  the  leading  financial 
fallacies;  and  also  show  the  financial  statistics  of  the  world,  of  the  leading 
nations,  and  of  the  United  States;  showing  that  there  is  not  enough  money 
in  existence  to  run  the  business  of  the  world.  Showing  also  that  in  the 
United  States  the  demand  is  increasing  and  the  supply  decreasing,  and 
that  either  our  circulating  medium  must  be  increased  sufficiently  to  meet  the 
wants  of  our  growing  country,  or  the  business  of  the  country  must  be  killed 
off  until  it  is  within  the  compass  of  our  present  circulation. 

A  proposed  remedy  is  suggested,  in  the  form  of  a  constitutional  amend- 
ment and  act  of  Congress,  with  full  text  of  each  and  comments  thereon. 


iv  PREFACE 

It  embraces  the  soundest  principles  of  the  systems  of  the  United  States^ 
England,  France  and  Germany. 

Your  careful  attention  is  called  to  this  matter,  and  you  are  earnestly  re- 
quested to  give  your  aid  to  produce  the  best  possible  results  in  Congres- 
sional legislation. 

The  correspondence  with  the  late  Senator  Plumb,  formerly  on  Senate 
Committee  on  Currency,  printed  on  a  preceding  page,  is  a  forcible  illustra- 
tion of  the  soundness  of  the  principles  advocated  in  the  following  pages. 

He  approached  the  subject  with  positive  antagonistic  views,  emphatic- 
ally expressed ;  yet,  after  a  careful  study  of  the  measures  proposed,  he  iti 
his  prophecy  recognizes  the  soundness  of  the  principles  of  financial  neces- 
sity and  reform  set  out  in  this  pamphlet. 

The  minds  of  many  are  so  preoccupied  with  historic  financial  danger 
of  the  past,  that  they  at  first  impulse  are  hostile  to  any  proposed  measure. 

The  object  of  the  writer  has  been  to  so  prepare  this  system  that  any 
student  will  see  that  it  is  based  on  the  soundest  and  most  thoroughly  tested 
financial  principles  of  the  centuries. 


CONTENTS. 


CHAPTER  I.    WHAT  Is  MONEY? 9 

FIAT  MONEY 10 

PURCHASING  POWER  OF  MONEY 10 

WILDCAT  MONEY 10 

STATE  BANK  NOTES 

NATIONAL  BANK  NOTES n 

UNITED  STATES  NOTES 12 

COMMERCIAL  VALUE  OF  COIN 12 

GRESHAM'S  LAW 13 

THE  REPRESENTATIVE  POWER  OF  MONEY 14 

THE  USE  OF  MONEY 14 

LOST  LABOR 15 

CHAPTER  II.    MONEY  SUPPLY 16 

IN  THE  UNITED  STATES 16 

COIN  PER  CAPITA  IN  Six  NATIONS 17 

DEBT  PER  CAPITA 18 

NATIONAL  LOANS  ASKED  FOR 18 

FLOW  OF  COIN 18 

OPPOSING  FORCES 19 

•CHAPTER  III.    THE  VOLUME  REQUIRED 20 

WANT  OF  MONEY 20 

BANK  STATEMENTS  1890 21 

VOLUME  OF  BUSINESS 21 

CALL  LOANS  .   ..    22 

VOLUME  OF  MONEY  NEEDED  FOR  UNITED  STATES 23 

A  CORNER  ON  MONEY 23 

FOUR  ALTERNATIVES 24 

INTIMIDATING  THE  NATION 24 

DEMONETIZATION  OF  PAPER 24 


vi  CONTENTS 

CHAPTER  IV.    REMEDIES 26 

FREE  COINAGE 26 

CHECK  AND  BANK-CREDIT 27 

50  y.  2  %  BONDS 28 

CLEARING-HOUSE  PLAN 29 

LAND  LOANS 29 

A  NATIONAL  BANK  OF  ISSUE 30 

GOLD  AND  SILVER  BASIS 30 

SUGGESTED  LEGISLATION 31 

A  CONSTITUTIONAL  AMENDMENT 31 

COPY  OF  CONSTITUTIONAL  AMENDMENT 32 

COMMENTS 32 

As  GOOD  AS  GOLD  . 33, 

GENERAL  MONEY  PLAN  OF  BILL 34 

CHAPTER  V.     PROPOSED  ACT  OF  CONGRESS 36- 

COPY  OF  BILL 39. 

NEW  SECTIONS  (ISSUE) 40 

"  "  (RETIRING) 41 

"  "  (CANCELLATION) 41 

"  "  (BANKS)  . 44 

BULLETIN  OF  FINANCE 54 

RECIRCULATION  OF  MONEY 54 

INSURANCE 56 

NON-TAXATION  OF  CURRENCY 58- 


POLITICAL    DANGER. 


If  the  Alliances,  or  Third  Party,  should  drop  all  other  issues,  for  the 
present,  and  adopt  a  National  platform  limited  to  one  plank,  embracing  an 
ample  and  sound  money  system,  they  would  sweep  the  next  campaign. 

The  political  party  that  offers  a  safe  increase  in  currency  to  relieve  the 
wants  of  the  people,  and  to  carry  on  the  business  of  the  Nation,  will  be 
offering  a  premium  for  every  vote.  An  increase  of  $20  per  capita,  on  a 
population  of  62,000,000,  is  a  bid  of  about  |ioo  per  vote. 

The  laboring  classes  and  those  borrowing  money  constitute  about  nine- 
tenths  of  the  voters,  and  with  this  as  a  leading  issue  they  would  vote  in- 
overwhelming  majorities  for  such  a- measure  in  utter  disregard  of  present 
party  lines.  It  will  certainly  be  made  an  issue,  unless  one  of  the  dominant 
parties  shall  pass  such  a  law  at  the  next  session  of  Congress.  But  if  the 
present  parties  show  the  people  "  how  not  to  do  it  "  by  wasting  the  time 
in  discussing  insufficient,  sham  and  subterfuge  plans  to  deceive  the  people, 
they  will  certainly  pay  the  penalty  of  utter  political  defeat,  if  the  third 
party  goes  before  the  people  with  only  the  money  question  as  an  issue. 

The  most  critical  period  in  the  history  of  present  political  parties  that 
has  arisen  since  the  war  will  occur  in  the  1891-2  session  of  Congress,  and 
on  this  question  of'the  increased  volume  of  money. 


FROM  SENATOR  SHERMAN. 

"MANSFIELD,  O.,  June  22,  1891. 
"HON.  R.  M.  WIDNEY: 

"My  Dear  Sir — Your  interesting  letter  of  the  i3th  inst.  has  been  care 
fully  read  in  connection  with  your  address  before  the  Commercial  Congress 
at  Kansas  City.  Like  you,  I  have  been  a  student  of  all  these  financial 
questions,  and  I  agree  with  you  that  the  free  coinage  of  silver  will  not  give 
the  slightest  relief  to  either  the  real  or  fancied  difficulties  of  the  time.  I 
agree  that  the  currency  question  should  be  dealt  with  entirely  by  the  United 
States  and  not  by  the  states,  and  that  some  general  system  must  be  de- 
vised to  supersede  the  National  banks :  which,  though  excellent  in  many 
respects,  must  surrender  their  circulating  notes  when  the  Government 
bonds  are  paid.  I  also  agree  that  only  gold  and  silver  can  be  made  the 
ultimate  standard  of  value  ;  but  that  for  convenience  of  circulation,  credit 
money  in  some  form  must  exist  to  an  amount  necessary  for  the  business  of 
the  country  ;  that  it  must  be  promptly  redeemable  in  gold  and  silver,  and 
that  it  should  rest  alone  upon  the  authority  of  the  Government.  As  to  a 
constitutional  amendment,  while  it  is  the  best  way  to  accomplish  a  thor- 
ough change  in  our  financial  system,  I  do  not  think  that  it  is  practicable 
under  the  terms  of  the  Constitution,  which  require  the  consent  of  two- thirds 
of  both  houses  of  Congress  and  three-fourths  of  the  states.  A  change  in 
the  Constitution  can  only  be  brought  about  by  some  great  convulsion  or 
war.  Whether  Congress  can,  under  its  limited  authority,  devise  any  Na- 
tional system  of  currency,  is  a  question  of  doubt.  Certain  it  is  that  it  can- 
not do  it  now,  while  the  wild  ideas  of  issuing  an  almost  unlimited  amount 
of  paper  money,  and  loaning  it  to  the  people  at  2  per  cent,  prevails. 

"All  that  I  can  say  now  is  that  I  will  give  the  subject,  whenever  it  comes 
before  the  Senate,  the  most  careful  consideration,  and  express  my  gratifi- 
cation that  the  financial  question  has  attracted  the  attention  of  gentlemen 
so  well  able  to  discuss  it  as  yourself.  Very  truly  yours,. 

"JOHN  SHERMAN." 


CHAPTER  I. 
vVHAT    IS    MONEY? 

FIAT  MONEY  — PURCHASING  POWER  OF  MONEY — WILDCAT  MONEY- 
STATE  BANK  NOTES  — NATIONAL  BANK  NOTES  — UNITED  STATES 
NOTES — COMMERCIAL  VALUE  OF  COIN— GRESHAM'S  LAW — THE  REP- 
RESENTATIVE POWER  OF  MONEY — THE  USE  OF  MONEY — LOST  LABOR. 

Many  definitions  of  money  have  been  given.  But  all  either  include 
something  that  properly  should  be  excluded,  or  exclude  something  that 
should  be  included. 

What  is  that  peculiar  function  or  power  that  alone  constitutes  an 
article  money,  and  which  when  wanting  leaves  the  article  not  money? 

When  everything  not  essential  is  removed,  what  is  left  ? 

I  recall  no  definition  wherein  the  words  used  include  all  that  should  be 
included  and  exclude  all  that  should  be  excluded.  I  submit  that  the  es- 
sential element  of  money  is  its  power  to  extinguish  a  debt  at  the  will  of  the 
debtor,  without  the  consent  of  the  creditor,  at  a  fixed  unit  of  value. 

To  illustrate:  Jones  owes  Brown  |ioo.  He  tenders  him  a  gold  bar, 
nine-tenths  fine,  of  the  value  of  $100.  Brown  refuses  it.  Jones  tenders 
him  two,  or  fifty  such  bars.  Brown  refuses  them,  the  debt  is  not  extin- 
guished. Jones,  having  read  the  literature  of  the  coin  men  that  money  is 
gold  or  silver  discs  stamped  of  certain  weight  and  fineness,  procures  dies 
and  stamps  and  reduces  his  bullion  to  discs  of  standard  weight  and  fine- 
ness, embellished  with  the  usual  designs  of  ten-  and  twenty-dollar  pieces. 
He  tenders  these  in  payment  of  the  debt.  They  are  refused,  the  debt  is 
not  extinguished.  The  fiat  of  the  Nation  is  not  on  his  discs  of  standard 
weight  and  fineness.  They  are  not  money. 

Jones  now  tenders  him  $50  in  greenbacks,  $25  in  silver  certificates  and 
$25  in  United  States  gold  coin.  Brown  still  refuses  to  accept  the  mixture, 
demanding  all  in  United  States  gold  coin.  Jones  deposits  the  above 
tender  in  Court  or  in  any  bank  for  Brown,  and  the  debt  is  extinguished 
at  the  will  of  the  debtor  and  without  the  consent  of  the  creditor.  Why? 
Because  the  fiat  of  the  Nation  says  that  it  is  a  legal  tender  in  satisfaction 
of  all  debts,  public  and  private. 

To  illustrate  again :  while  in  the  United  States  Jones  tenders  to  Brown 
English  sovereigns,  or  gold  francs,  or  gold  marks,  to  the  value  of  $100. 
Brown  refuses  to  receive  them,  and  the  debt  cannot  be  extinguished  by 
them  without  his  consent.  These  coins  are  not  money  in  the  United  States  ; 
but  they  are  money  in  England,  France  or  Germany  respectively.  Why? 
The  fiat  of  those  nations  make  them  money,  a  legal  tender  in  satisfaction 
of  debts  in  their  jurisdiction.  But  the  fiat  back  of  the  sovereigns,  francs 
and  marks  does  not  extend  to  the  United  States  ;  hence  they  are  not  money 
in  the  United  States — only  bullion  or  an  article  of  merchandise.  So  also 


NATIONAL  CURRENCY 


only  the  fiat  of  the  Nation,  and  the  fiat  of  the  Nation  is  thus  held  as  col- 
lateral security  for  the  National  bank  promissory  note. 

Instead  of  putting  \hefiat  back  of  a  bond,  and  the  bond  back  of  a  bank 
note,  put  this  fiat  back  of  the  note  direct  and  leave  the  middle-man  bond 
and  bank  out  as  useless  surplusages. 

Yet  many  presidents  of  National  banks  publicly  express  their  contempt 
for  fiat  money:  not  knowing  enough  of  their  own  banking  system  to  realize 
that  every  dollar  of  their  bank  note  circulation  vsfiat  and  is  secured  by  the 
fiat  of  the  United  States. 


GREENBACKS. 

Now  take  up  with  feelings  of  respect  a  modest-looking  greenback, 
reads : 


It 


$5  THE    UNITED    STATES 

will  pay  the  bearer 
FIVE      DOLLARS. 

%  Washington,  D.  C. 


$5 


W.  S.  ROSECRANS, 

Registrar. 


I.  N.  HUSTON, 
Treasurer  of  the  U.  S. 


Turning  it  over  you  read  on  the  back  the  Nation's  fiat:  "  This  note  is  a 
legal  tender  at  its  face  value  Jor  all  debts,  public  and  private,  except  duties 
on  imports  and  interest  on  the  public  debt. ' ' 

This  scornfully-spoken-of  fiat  alone  makes  the  innocent  piece  of  paper 
money  u  as  good  as  gold."  This  is  the  fiat  back  of  which  are  2,500,000,000 
acres  of  land,  with  all  the  cities,  villages,  banks,  farms,  railroads,  manu- 
factories and  improvements  thereon,  including  all  the  gold  and  silver  and 
enlightenment,  inventive  genius,  push,  energy,  and  fighting  capacity  of 
62,000,000  people. 

Enough  oj  this  fiat  money  to  run  the  business  of  the  Nation,  on  a  system 
free  from  the  strangling  grasp  of  foreign  or  domestic  rings,  syndicates  or 
clearing  houses,  is  what  the  people  want.  And  now  that  the  American 
people  have  started  in  on  this  job,  they  will  not  let  up  until  it  is  as 
thoroughly  finished  as  the  revolutionary  or  Mexican  war  or  the  Mafia. 

He  is  dull  of  ear  indeed  who  does  not  hear  the  battle  cry  of  financial 
freedom  from  every  farm,  village,  city  and  workshop  in  the  land.  Posterity 
pleads,  with  silent  fear  and  outstretched  hands,  that  this  generation  shall 
not  allow  the  fetters  of  financial  slavery  to  be  forged  in  its  day  and  riveted 
upon  their  hands  in  infancy,  dooming  them  to  the  tenancy  of  Ireland  or  the 
slavery  of  English  workshops,  with  compensation  that  prolongs  the  pangs 
of  starvation  in  the  stinging  pain  of  winter's  cold. 

COMMERCIAL  VALUE   OF  COIN. 

Much  confusion  has  arisen,  in  the  speeches  and  writings  of  financiers, 
from  not  distinguishing  between  the  commercial  value  of  the  article  used 


NATIONAL  CURRENCY  13 

for  money,  and  the  real  money  value.  As  shown,  the  money  value  is  only 
the  fiat  of  the  Nation.  It  may  be  impressed  on  gold,  silver,  copper,  paper, 
or  any  other  material.  The  material  will  differ  in  its  commercial  value, 
and  the  commercial  value  will  increase  or  decrease  as  the  commercial  de- 
mand for  the  article  varies  or  as  the  volume  of  the  article  increases  or  de- 
creases. 

In  1834  the  supply  of  gold  was  in  excess  of  silver,  and  the  silver  in  a 
dollar  advanced  to  $1.03.  In  1878  the  supply  of  silver  exceeded  that  of 
gold,  and  the  gold  in  a  dollar  advanced  to  #1.37:  or  it  might  be  said  that  the 
value  of  silver  fell  commercially  to  73  cents  in  the  silver  dollar.  The  com- 
mercial value  of  the  paper  dollar  is  nothing.  Yet  the  fiat  money  value  of 
the  gold,  silver  or  paper  dollar  remained  the  same.  Why?  Because  the 
United  States,  having  placed  its  fiat  on  the  three,  is  practically  bound  to 
make  good  the  difference  between  the  highest  one  and  the  two  lower  ones. 
That  is,  the  United  States  receives  a  gold  dollar  in  value  when  it  first  pays 
out  a  paper  dollar,  and  when  the  paper  dollar  is  received  it  returns  for  it 
the  value  of  the  gold  dollar.  The  same  occurs  when  gold  or  silver  is 
issued  as  money.  The  Government  is  responsible  for  the  difference  be- 
tween their  commercial  values. 

Legislation  never  did  and  never  will  keep  the  commercial  value  of  gold> 
silver,  copper,  or  iron  together,  on  any  ratio.  Legislation  can  only  agree 
that  the  Nation  shall  pay  the  difference.  It  is  this  agreement  alone  of  the 
Nation  to  pay  the  difference  that  keeps  over  $400,000,000  silver  certificates 
on  a  par  with  gold.  It  is  equally  potent  to  keep  currency  on  a  par  with 
gold. 

The  published  statistics  issued  by  the  department  in  1891  show  that  the 
ratio  between  gold  and  silver  has  varied  for  over  200  years  from  14.14  to 
22.09.  These  variations  existed  under  free-coinage  laws  as  noticeably  as 
at  other  times.  The  laws  of  the  United  States  fixed  the  ratios  at  16  to  i : 
yet,  as  a  matter  of  fact,  at  no  time  in  the  history  of  the  Nation  was  the 
commercial  ratio  16  to  i ;  it  was  always  above  or  below  it.  (See  Senator 
Jones's  speech  of  January,  1891,  pp.  15  to  16.)  Therefore,  to  have  a  money 
of  fixed  value,  the  article  used  should  have  no  commercial  value  :  for  the 
variation  of  the  commercial  value  disturbs  the  money  value. 

If  the  commercial  value  of  gold  goes  up  in  Europe,  as  it  recently  did, 
gold  money  will  leave  this  Nation  by  the  hundreds  of  millions.  If  the 
commercial  value  of  silver  goes  up  in  Europe,  silver  money  will  go  there, 
as  in  1834. 

GRESHAM'S   LAW. 

The  above  shows  the  true  law,  which  is  imperfectly  stated  by  Gresham. 
He  says  :  "  Bad  money  will  expell  good."  This  is  not  the  law.  The  law 
above  shown,  and  which  he  attempts  to  state,  is  this:  The  article  used  f of 
money,  having  the  highest  commercial  value  in  any  market,  will  seek  thai 
market. 

This  rule,  when  analyzed,  is  the  common  commercial  rule  that  any 
article  seeks  the  highest  market.  The  danger  in  fixing  our  money  fiat  on 
gold  or  silver  is  the  danger  of  the  commercial  article  carrying  our  money 
fiats  out  of  the  country  on  its  commercial  wings,  leaving  us  short  of  money  : 


?4  NATIONAL  CURRENCY 

as  witness  the  year  1891,  when  $80,000,000  gold,  on  account  of  its  commeiv 
rial  value,  left  us  for  Europe. 

It  was  not  bad  money  driving  good  money  out :  it  was  the  commercial 
value  of  gold  advancing  beyond  its  money  value,  and  seeking  the  best 
market.  Subsequently  gold  returned  by  the  millions,  while  silver  was 
being  issued  by  the  millions  per  month:  showing  that  silver  did  not 
drive  gold  out. 

THE    REPRESENTATIVE    POWER    OF    MONEY. 

We  said  that  the  essential  element  of  money  is  its  power  to  extinguish 
debt,  at  the  will  of  the  debtor  without  the  consent  of  the  creditor,  at  a 
fixed  unit  of  value.  Money  therefore  is  a  unit  of  value  for  all  property,  labor 
or  damages.  It  is  the  unit  representative  of  a  day's  labor,  or  of  mental 
service,  or  land,  or  goods.  Its  unit  is  multiplied  or  subdivided  so  as  to 
represent  multiples  or  subdivisions  of  property  or  labor.  It  is  a  legal  evi- 
dence of  units  of  value  of  labor  or  property :  readily  exchanged  for  these 
things,  to  those  who  want  this  convenient  evidence  for  the  purpose  of 
exchanging  it  again  for  other  things  they  want  to  possess. 

The  representative  element  of  money  is  the  fact  that  it  represents  the 
will  or  final  mandate  of  society  on  the  unit  and  standard  of  value  and  in 
extinguishing  debts  at  the  choice  of  the  debtor. 

As  a  result  of  this,  money  represents,  or  is  evidence  of,  the  value  of 
all  things  that  human  beings  place  a  value  upon ;  and  is  therefore  accepted 
as  the  common  medium  of  exchange  by  society. 

Gold  and  silver  coin  and  bullion  have  a  high  commercial  value  in  a 
small  bulk  and  convenient  form,  and  for  that  reason  are  accepted  generally 
as  a  common  medium  of  exchange.  The  less  the  fiat  of  a  nation  is  worth, 
the  more  reliance  is  placed  on  the  commercial  value  of  the  article  used ; 
hence  uncivilized  nations,  having  no^atf,  use  gold  and  silver  or  some  other 
merchandise  for  purposes  of  exchange. 

THE    USE   OF   MONEY. 

The  most  important  use  of  money  is  to  represent  subdivided  or  small 
values.  No  person  in  society  wants  a  very  large  amount  of  any  one  thing 
at  any  one  time ;  yet  all  want  small  quantities  of  many  things  at  a  time. 
Money,  representing  a  fixed  unit  of  values,  can  be  conveniently  cared  for 
and  kept  without  loss,  and  can  be  paid  out  for  small  quantities  of  com- 
modities as  needed.  It  makes  it  possible  for  men  of  property  to  employ 
day  labor  and  pay  for  it  in  money. 

There  are  today  over  1,000,000  idle  laborers  in  the  United  States,  and 
men  with  property  enough  to  employ  them.  But  the  laborers  cannot  be 
paid  in  property. 

With  enough  money  in  circulation  these  million  idle  laborers  would  earn 
say  $1.50  per  day,  or  $1,500,000  per  day,  or  $450,000,000  per  300  days. 

This  sum  would  be  spent  by  them  for  food  and  clothes  and  comforts  of 
life  and  homes.  This  would  almost  relieve  every  case  of  destitution  in  our 
whole  land ;  would  give  additional  market  for  all  farm  and  manufactured 
products,  and  would  soon  pay  off  th-e  debts  of  the  people. 


NATIONAL  CURRENCY  15 

LOST   LABOR. 

The  loss  of  this  labor  is  irreparable.  An  idle  day  is  gone  forever.  It 
•can  never  be  recalled,  or  utilized.  The  laborers  have  a  loss  as  real  as  if 
their  daily  wages  of  |i,5oo,ooo  were  burned  up  at  the  end  of  each  day. 
One  of  the  greatest  uses  of  money  is  to  save  this  labor. 

To  save  this  labor  is  to  increase  the  products  of  the  Nation,  and  also 
increase  the  amount  consumed.  Instead  of  scanty  consumption  of  neces- 
saries, the  laborer  will  have  means  for  a  better  supply  of  food  and  clothing. 

The  amount  of  labor  lost,  as  above  shown,  would  in  two  years  levee  the 
Mississippi,  build  the  proposed  Hennepin  Canal,  complete  the  Galveston 
Harbor  and  build  the  Nicaragua  Canal. 

It  would  annually  complete  current  public  works,  develop  the  now  dor- 
mant private  industries  of  the  people,  and  out  of  the  earnings  establish 
happy  homes  for  all  thrifty  laborers.  Yet  all  this  labor  is  daily  and  annu- 
ally destroyed,  to  the  entire  loss  of  humanity. 


RESOLUTIONS   BY  Los   ANGELES  CHAMBER   OF  COMMERCE. 
SENATOR  SHERMAN'S  LETTER. 

[From  the  Lot  Angeles  Times,  December  12,  1891.] 

At  A  meeting  of  the  Chamber  of  Commerce  last  evening  Judge  R.  M. 
Widney  cflered  the  following  resolutions,  which  received  the  unanimous 
vote  of  the  California  Bankers  Association  at  Los  Angeles,  March  13,  1891, 
and  it  was  unamimously  endorsed  by  a  vote  of  the  Chamber : 

Resolved-  '\  ii..'  lliis  Convention  respectfully  request  Congress  at  its 
next  ses.si  n  t<>  -liform  money  system  for  the  people  of  the  United 

States,  \\-  i  ;  liar  as  a  standard  or  unit  of  value,  using  gold,  sil- 

ver ami  curi  r  t  circulating  medium,  in  a  sufficient  volume  to  fully 

meet  ;•  .  ith  the  growing  wants  of  the  business  of  the  country  ; 

found  ii".  P  currency  upon  the  wealth  of  the  whole  Nation  ;  making 

gold,  silvtM  and  currency  a  legal  tender  and  exchangeable  at  par  on  de- 
mand, and  fixing  by  a  Constitutional  amendment  the  legality  of  such  a  cir- 
culating medium,  and  preventing  the  dangers  of  inflation,  contraction, 
repudiation  or  change  in  the  standard  of  value. 


CHAPTER  II. 
MONEY  SUPPLY. 

THE  WORLD'S  MONEY  SUPPLY  —  IN  THE  UNITED  STATES  —  COIN  PER 
CAPITA  IN  Six  NATIONS  —  DEBT  PER  CAPITA  —  NATIONAL  LOANS 
•ASKED  FOR  —  FLOW  OF  COIN  —  OPPOSING  FORCES. 

The  world's  coin  and  bullion  is  : 

Gold $3,984,256,589 per  capita    $3  22 

Silver 4,512,754,655. ..."        "         3.65 


Total $8,497,011,244 '  $6.87 

The  annual  averaged  product  for  eight  years,  1881  to  1888,  is: 

Gold $108,376,258 per  capita    $.08 

Silver 121.389,242 "        "  .09 

Total $229,665,500...."        "       $.17 

The  world's  consumption  of  gold  and  silver  annually  in  the  arts,  as 
nearly  as  can  be  had,  is  : 

Gold $64,000,000 per  capita  $   05 

Silver 21,660,000 "        "  ,02 

Total $85,660,000 "        "       $.07 

Leaving  the  small  sum  of  $144,005,506,  or  10  cents  per  capita,  to  be  added 
annually  to  the  world's  working  coin  capital. 

The  business  of  the  world  cannot  be  run  on  this  short  supply.  The 
nations  therefore  have  supplemented  the  use  of  gold  and  silver  money  by 
the  issue  of  some  $2,178,642,376  of  unsecured  paper  money,  or  pure  fiat 
money,  in  order  to  conduct  the  world's  business. 

IN  THE  UNITED   STATES 

The  facts  are : 

Gold $694,869,680 per  capita  $11.00 

Silver 485,370,497 "        "         S.oo 

Total $1,180,240,177...."        "      $19.00 

The  annual  product  in  the  United  States  is  : 

Gold 132,976,000 per  capita  $    .53 

Silver 64,768,730...."        u          1.03 

Total $97,735,730...."          "      $1-56- 


NATIONAL  CURRENCY  j7 

Of  this  there  is  used  for  industrial  purposes: 

Gold $16,697,000. 

Silver 8,767,000. 


Total 125,464,000. 

This  leaves  for  annual  coinage  purposes,  both  of  gold  and  silver, 
$72,271,730,  or  per  capita  $1.10. 

The  increase  of  population  is  about  2,000,000  per  year,  so  that  the  annual 
output  of  gold  and  silver  would  only  yield  about  $36  per  capita  for  the 
annual  increase  of  population.  It  could  not  possibly,  therefore,  increase 
the  present  $19  per  capita,  for  the  other  64,000,000  people.  The  latter  can 
only  be  done  by  a  currency  issue. 

The  following  conclusions  are  safely  deduced  from  the  foregoing  facts: 

The  per  capita  of  money  in  the  world  is  $6.87.  The  annual  increase  is 
about  10  cents  per  capita. 

The  per  capita  in  the  United  States  is  $19,  and  the  increase  $1.10. 

Therefore  the  United  States  has  about  three  times  its  legitimate  propor- 
tion of  the  world's  gold  and  silver. 

The  conclusion  is  that  as  the  world  rises  to  higher  civilization  and  com- 
merce, coin  money  will  flow  from  us  into  those  nations,  equalizing  the 
distribution  of  gold  and  silver,  and  constantly  draining  us  of  those  com- 
modities, and  lessening  our  volume  of  money. 

Notwithstanding  the  fact  that  the  United  States  has  $19  in  coin,  it  has 
been  compelled  to  issue  an  additional  $420,372,225  in  paper  money,  a  per 
capita  of  $6.72. 

In  gold  and  silver  coin  European  nations  have  as  follows : 

England $   650,000,000 per  capita  $18.00 


France  
Germany  

1,  600  .000,  COO. 

6  '  j  GOO  OOO 

... 

Russia  

250,000  ooo  . 

Italy  

2OO  OOO  OOO 

United  States 

i  i  So  240  177 

Average.  . 

All  other  nations 2,971,771,067 •'         " 

It  will  be  seen  at  once  that  the  six  nations  above  named  have  vastly 
more  then  their  per  capita  of  gold  and  silver.  The  other  nations,  having 
only  $2  per  capita,  will  steadily  drain  those  six  nations  until  more  of  an 
equilibrium  is  reached.  Here  is  one  of  the  causes  of  the  great  money 
stringency  in  them.  And  there  is  no  permanent  or  possible  relief  on  the 
coin  basis.  India  alone  in  recent  years  has  absorbed  over  $1,000,000,000 
in  gold  from  the  above  six  nations. 

Rand-McNally's  Banker's  Magazine  for  August,  1891,  says:  '.'With  the 
exception  of  England,  perhaps,  every  country  in  Europe  is  practically 
insolvent." 

The  debt  of  the  nations  of  the  world  is  about  $25,636,075,840  above 
their  sinking  fund. 


18  NATIONAL  CURRENCY 

The  debt  per  capita  of  the  leading  nations  is : 

France $116.25 

England 87.79 

Russia 30.79 

Austria-Hungary r .       76.84 

Italy 84.00 

United  States 14.63 

From  this  it  will  be  seen  that  the  demand  for  money  in  those  foreign 
nations  is  greater  than  in  the  United  States,  so  far  as  the  public  debt  is 
concerned.  Money  will  there  command  a  higher  price,  and  will  flow  from 
us  to  them. 

Foreign  nations  are,  or  recently  were,  asking  loans  as  follows  : 

Austria-Hungary $100,000,000 

France  (taken) 182,000.000 

Mexico 40,000,000 

Argentine  Republic 500,000,000 

Other  South  American  states 725,000,000 

African  Mines  and  Trust  Companies 350,000,000 

Total $1,897,000,000 

Other  foreign  nations  want  fully  aS  much  more. 

It  will  be  seen  from  the  above  that  foreign  nations  are  in  the  market 
bidding  for  our  coin  money.  They  must  have  it  at  any  price  to  meet  their 
obligations,  and  will  draw  from  us.  We  are  also  bidding  for  their  coin. 
As  at  an  auction,  it  is  going  to  the  highest  bidder.  Each  is  financially 
fighting  the  others  to  get  coin  from  them  to  save  itself. 

The  commercial  value  of  gold  and  silver  coin  causes  them  10  constantly 
flow  to  the  place  of  highest  market  value. 

Since  writing  the  above  my  attention  has  been  directed  to  a  recent  July 
circular  of  Henry  Clews  &  Co.  He  says  : 

"  On  all  legitimate  grounds,  exports  of  gold  should  now  certainly  end; 
but  natural  causes  for  the  ebb  and  flow  of  the  precious  metal  between  this 
country  and  Europe  are  by  force  thrust  on  one  side  by  the  new  plan 
adopted  by  Paris,  London  and  Germany  to  treat  it  merely  as  so  much 
merchandise  in  connection  with  their  dealings  with  this  country:  hence 
their  purchase  at  full  asking  price,  in  the  same  way  as  cotton,  wheat  or 
any  other  commodity.  It  is  impossible,  therefore,  to  judge  how  much  or 
how  little  will  hereafter  be  forced  out  of  the  country." 

We  can  safely  predict  that  the  outflow  of  gold  will  continue  so  long  as 
its  commercial  value  is  greater  in  the  foreign  market.  Several  times  has 
the  United  States  reduced  the  quantity  of  metal  in  coins  to  keep  them  from 
going  abroad  on  account  of  a  higher  foreign  commercial  value. 

As  a  scientific  fact,  the  money  article  of  a  nation,  for  home  use,  should 
be  devoid  of  any  commercial  value.  Its  Jiat  value  would  cause  it  to 
remain  at  home,  keeping  a  steady  volume  for  trade. 

It  is  evident,  from  a  general  view  of  the  facts,  that  no  nation  is  in  a 
position  to  give  permanent  financial  relief  to  any  other.  The  only  remedy 


NATIONAL  CURRENCY  19 

is  for  each  nation,  by  reason  of  its  sovereign  power,  to  provide  its  own 
sufficient  volume  of  money.  This  power  is  vested  in  each  nation  ;  and 
why  should  any  nation  leave  this  power  unused  as  to  its  own  relief  and 
whiningly  beg  other  nations  to  loan  it  money  ?  Why  pay  to  use  foreign 
money  and  let  our  own  power  to  issue  money  lie  dormant?  We  pay 
annually  over  $60,000,000  (nearly  the  annual  money  yield  of  our  mines)  for 
the  use  of  some  $  1,500,000,000  of  foreign  money  ;  whereas,  we  as  a  people 
have  the  power  to  issue  this  money  for  our  own  use,  and  iree  of  cost,  as  a 
nation. 

A  bankers'  magazine,  published  in  the  United  States  by  a  foreigner, 
whose  editor  wrote  me,  "This  editor  is  in  direct  communication  with  lead- 
ing bankers  in  England  to  prevent  the  debasement  of  coin  (free  coinage) 
and  a  paper  money  based  on  land  (Widney's  currency),"  says  in  a  recent 
issue  :  "The  English  own  the  United  States  in  a  far  more  real  sense  than 
ever  George  III  did  or  could.  They  own  the  railways,  the  mines,  the 
manufactories.  What  do  they  not  own?  " 

The  heaviest  opposition  to  a  sufficient  and  complete  money  system  in 
the  United  States  will  come  from  English  banks  and  financial  institutions 
and  their  cooperators  in  the  United  States.  England  has  a  very  soft  snap 
in  loaning  her  money  at  a  high  rate  of  interest  and  buying  up  the  best 
properties  in  the  United  States.  She  will  fight  hard  to  keep  us  where  we 
must  use  her  money  and  pay  her  for  it. 


IT  is  anticipated  that  the  leading  type 
foundries  of  the  United  States  will  be 
in  the  hands  of  a  British  syndicate  by 
the  middle  of  February.  The  articles 
of  incorporation  of  the  syndicate  have 
been  drawn  up  under  the  laws  of  New 
Jersey. — Los  Angeles  Times,  Jan.  31. 


CHAPTER  ITI. 


THE  VOLUME    REQUIRED. 

THE  VOLUME  REQUIRED — WANT  OF  MONEY  —  BANK  STATEMENTS,  1890— 
VOLUME  OF  BUSINESS  —  CALL  LOANS — VOLUME  OF  MONEY  NEEDED 
FOR  UNITED  STATES — A  CORNER  ON  MONEY — FOUR  ALTERNATIVES — 
INTIMIDATING  THE  NATION  —  DEMONETIZATION  OF  PAPER. 

This  general  picture  of  the  world's  supply  and  demand  for  money, 
clearly  shows  that  the  nations  having  more  than  their  per  capita  of  coin  will 
continue  to  lose  more  of  it :  and  that  the  nations  most  in  debt  per  capita 
must  draw  from  those  least  in  debt  per  capita. 

Both  of  these  laws  are  operating  against  the  United  States,  and  will  con- 
tinue to  deplete  us  of  our  coin  money. 

Another  law  is  operating  with  great  force :  our  Nation  is  rapidly  increas- 
ing in  population,  in  commerce,  in  production,  and  the  building-up  of 
civilization  on  an  area  of  3,400,000  square  miles  oi  land.  To  do  this  re- 
quires a  vast  volume  of  money. 

The  financial  cinch  can  be  expressed  in  a  few  words.  Our  demands  for 
and  use  of  money  is  rapidly  increasing,  and  our  supply  decreasing'. 

Here  is  the  storm  center.  This  is  the  threatening  danger.  And  we 
can  have  no  permanent  safety  from  financial  storms  while  these  conditions 
continue. 

Either  our  circulating  medium  must  be  increased  sufficiently  to  meet  the 
w~nk  of  our  growing  country,  or  the  business  of  the  country  must  be  killed 
off  until  it  is  within  the  compass  of  our  present  circulation. 

What  are  the  historic  facts? 

Legitimate  industries,  representing  sufficient  property  value,  as  security 
for  loans  or  credit,  have  to  shut  down,  for  want  of  money. 

The  following  Associated  Press  dispatches  are  a  sample  of  the  con- 
dition of  the  country : 

"  CHICAGO,  August  20. — The  American  Wheel  company,  said  to  be  the 
largest  manufacturers  in  the  world  of  wheels  for  vehicles,  is  insolvent.  The 
total  assets  are  $4,105,000,  and  the  liabilities  $1,800,000.  Stringency  of  the 
money  market  and  inability  to  secure  the  extension  of  obligations  caused 
the  collapse  ;  twenty-five  hundred  employes  are  made  idle." 

"LOUISVILLE  (Ky.),  August  27. — The  Bremaker  Paper  company  as- 
signed today.  The  assignor  says  that  the  liabilities  are  about  $250,000, 
and  the  assets  about  $750,000.  Financial  stringency  caused  inability  to 
meet  maturing  notes." 

The  above  are  samples  of  vast  numbers  appearing  in  the  daily  news. 

Laborers  by  the  million  desiring  work  are  idle,  while  employers  with 
abundant  property  resources  want  their  labor  but  cannot  get  it,  for  want 
of  money. 


NATIONAL  CURRENCY  at 

Debtors' having  property  of  much  greater  value  than  their  debts  cannot 
pay  their  debts,  for  want  of  money. 

The  unused  labor  of  the  last  five  years — absolutely  lost,  destroyed, 
annihilated — would  have  paid  off  every  farm  debt  in  the  United  States,  as 
well  as  the  whole  debt  of  the  Nation,  states  and  counties. 

Yet  all  this  was  lost,  for  want  of  money. 

A  few  combinations  of  men  have  been  able  to  corner  the  limited  volume 
Of  money,  thereby  depreciating  the  price  of  property,  enabling  creditors  to 
confiscate  the  property  of  the  debtor. 

For  want  of  money : 

The  failures  in  1890  were $      190,000,000 

Shrinkage  in  stocks  and  bonds  in  New  York. . .  600,000,000 

Shrinkage  in  values  in  the  United  States 10,000,000,000 

Banks  called  in  over 100,000,000 

The  United  States  Treasury  paid  out  over 200,000,000 

Banks  issued  panic  certificates 30,000,000 

United  States  Treasury  deposited  in  banks. . .  30,047,118 

Total $11,150,047,116 

This  equals  nearly  one-sixth  of  the  whole  wealth  of  the  Nation. 

The  July,  1891,  Treasury  statement  shows  that  if  it,  and  all  of  its 
branches,  were  left  bare,  only  $51,552,064  could  be  added  to  the  circulation 
of  the  country. 

The  Treasurer  "has  abandoned  the  idea  of  redeeming  $40,000,000  or 
more  of  the  United  States  bonds,  if  it  can  possibly  be  avoided,  for  the 
reason  that  it  will  reduce  to  a  most  inconvenient  point  the  working  balance 
in  the  sub-treasuries." 

State,  city  and  county  funds  are  drawn  out  of  their  legal  vaults  and 
deposited  in  banks,  all  over  the  country,  to  help  stem  the  tide  of  disasters 
occuring  for  want  of  money. 

The  Treasury  report  for  December,  1890,  shows  the  following  facts : 

The  8050  banking  institutions  in  the  United  States— National,  state, 
private  and  savings — show : 

Due  depositors $4,603,844,157 

Cash  in  these  banks  : 

Gold  coin $  99,811,011 

Silver 28,811,478 

Paper  money 349.694,405 

Total $478,316,894 

At  the  same  time  these  banks  have  loaned  out  to  the  people  $3,893,- 
957.799- 

Here  was  an  aggregate  credit  business  of  $8,497,8oi,956,done  on  a  money 
basis  of  $478,316,694,  or  5  cents  on  the  dollar  ;  or  10  cents  on  the  dollar  to 
meet  the  liabilities. 

The  volume  of  business  in  the  United  States  the  same  year  was  over 
$170,000,000,000.  The  volume  of  money  in  the  United  States  was  $1,600,- 
000,000,  or  i  cent  on  the  dollar  for  business.  But  the  actual  money  for 


22 


NATIONAL  CURRENCY 


business  was  not  over  $500,000,000,  or  one-third  of  a  cent  on  the  dollar 
of  the  volume  for  business. 

The  actual  money  in  a  country  holds  the  same  relation  to  the  business 
volume  that  the  cash  in  banks  holds  to  the  deposits. 

When  the  cash  reserve  runs  too  low  there  is  great  danger. 

The  cash  on  which  the  business  of  the  United  States  has  been  done 
became  too  small ;  the  result  was  financial  disasters  of  a  magnitude  and 
number  never  before  known  in  the  history  of  the  Nation. 

This  condition  of  finances  drives  our  banks  to  the  system  of 

CALL    LOANS 

or  thirty-  or  ninety- day  paper.  It  would  be  unsafe  to  make  time  loans> 
as  any  sudden  demand  or  stringency  might  occur,  forcing  the  bank  to  call 
its  money  in.  Who  can  take  a  call  loan  or  a  thirty-  or  ninety-day  loan  and 
plant  an  orchard  or  develop  a  farm,  build  a  railroad,  open  a  mine,  or 
establish  any  industry  ?  As  a  result,  a  vast  per  cent  of  all  industries  all 
over  the  Nation  are  at  a  standstill  for  want  of  money  on  time  loans. 

The  December,  1890,  report  to  the  Comptroller  from  all  of  the  National 
banks  shows  less  than  2  per  cent  above  a  25  per  cent  reserve.  This  leaves 
only  $50,000,000,  in  all  the  banks,  to  do  business  with.  Of  this,  the  same 
report  shows  that  over  $30,000,000,  is  United  States  Treasury  money. 
This  leaves  practically  only  about  $20,000,000  for  active  use.  This  whole 
sum  would  not  suffice  to  safely  start  a  single  railroad  enterprise. 

During  the  year  1891  the  banks  have  been  strengthening  their  reserves 
by  calling  in  money  from  the  channels  of  trade.  The  banks  of  England, 
France  and  Germany  have  drawn  in  over  $80,000,000.  The  banks  of  the 
United  States  are  rapidly  drawing  in  millions  more.  There  is  not  enough 
to  go  around;  and  the  stronger,  in  self  protection,  are  drawing  it  away  from 
the  others. 

These  facts  are  not  overcome  by  the  other  fact  that  a  few  score  of  men 
or  corporations  have  all  they  need,  or  even  a  small  amount  to  spare.  The 
question  is,  Have  they  enough  to  spare  to  meet  the  want  of  the  whole  popu- 
lation and  business  of  the  country?  If  so,  why  do  they  not  put  it  in  circu- 
lation ? 

The  volume  of  money  should  be  ample  to  meet  and  overcome  all  the 
foregoing  demands.  They  are  legitimate  objects  to  be  cured  by  an  increased 
volume. 

Generally  the  volume  should  be  such  that  the  United  States  Treasury 
could  hold  a  working  reserve  of  say  25  per  cent  of  the  National  circulation. 

So  also  the  banks  could  hold  a  25  per  cent  reserve  of  deposits.  So  also 
the  state,  city  and  county  money  could  rest  in  the  public  vaults  for  that 
purpose. 

Hoarding  and  loss  by  accidents  could  be  estimated  and  provided  for. 
In  addition  to  the  above  reserves,  there  should  be  ample  working  volume 
in  circulation  among  the  people,  sufficient  for  all  legitimate  demands,  time 
loans  as  well  as  call  loans. 


NATIONAL  CURRENCY  93 

More  accurate  figures  would  be  suggested  by  the  following  statistics : 

State  and  National  Banks  have  deposits  (December,  1890),  $2,516, 179,80^ 
Take  this  as  the  volume  of  the  issue  and  we  have  say : 

25  per  cent  for  United  States  Treasury $629,044, 951 

25  per  cent  for  bank  reserves 629,044,951 

State,  county  and  city  money 196,483,232 

Total  reserve $1,454.573,232 

Deducting  the  reserve  from  the  proposed  volume  of  $2,516,179,807, 
leaves  $1,061,606,673  for  active  use. 

If  the  above  reserves  were  taken  from  our  present  volume  of  $1,600- 
512,402,  it  would  legally  leave  only  $145,939,268  for  use. 

There  is,  however,  an  encroachment  on  public  funds  and  the  United 
States  Treasury  to  prevent  a  widespread  financial  calamity ;  about 
$400,000,000  being  thus  used,  giving  the  62,500,000  people  of  the  United 
States  a  working  money  volume  of  say  $550,000,000,  or  about  $8.80  per 
capita. 

The  suggested  issue  would  first  put  all  reserve  and  public  money  where 
they  legally  belong,  and  also  increase  our  active  working^  volume  $511,606,- 
673  over  what  it  now  is. 

A   CORNER   ON   MONEY. 

The  owners  of  money  naturally  do  not  want  the  volume  increased. 
While  it  is  limited  they  can  control  the  rate  of  interest  and  the  Value  of  all 
labor  and  products,  and  can  dictate  the  price  of  all  property. 

A  corner  on  railroad  rates  is  dangerous  :  so  is  a  corner  on  wheat,  or 
corn,  or  sugar,  wool,  or  any  of  the  staple  products.  But  of  all  dangers  a 
corner  on  money  is  the  worst.  A  corner  *on  money  is  a  corner  on  all  the 
other  corners  combined,  and  can  control  the  social  and  political  as  well  as 
the  producing,  labor  and  property  interests  of  the  Nation. 

Producers,  pressed  to  pay  cost  of  living  and  of  production,  must  sell  in 
the  wholesale  market.  A  corner  in  money  enables  only  a  few  to  purchase, 
and  they  fix  the  lowest  price  and  pay  out  the  least  amount  of  money  to  the 
producer.  The  producer  is  compelled  to  buy  at  retail  all  of  his  various 
articles  of  consumption,  directly  or  indirectly,  from  the  capitalist,  who,  now 
having  a  corner  on  the  products,  charges  the  former  producer  the  highest 
price  for  consumption. 

Pharaoh  of  old  bought  up  all  the  grain  crop  of  Egypt  during  the  seven 
years  of  plenty  at  a  low  price,  and  cornered  the  grain  crop.  Then,  during 
the  seven  years  of  famine,  advanced  the  price  and  sold  the  cornered  grain 
to  his  subjects,  until  at  the  end  of  the  first  year  he  had  all  of  their  money. 
During  the  second  year  he  took  in  all  of  their  flocks  and  herds  for  bread. 
The  third  year  he  bought  all  of  their  lands  and  all  of  the  people.  He  now 
had,  from  the  original  corner  on  money,  cornered  his  whole  nation.  So  he 
leased  them  the  lands  for  one-fifth  of  the  crop  forever.  Then  the  nation, 
to  use  a  common  phrase,  "  busted  uj>." 

The  tenantry  and  laborers  of  England  and  Ireland  are  practically  today 
sold  into  bondage  to  the  money  Pharaohs  of  England. 


^  NATIONAL  CURRENCY 

On  "Black  Friday  "  a  few  men  in  New  York  cornered  the  moneyfc 
and  only  for  Government  aid  would  have  wrecked  whole  industries. 

Government  aid  in  December,  1890,  alone  prevented  a  nation's  calamity 
under  similar  circumstances.  And  now,  with  over  $80,000,000  coin 
exported  and  the  United  States  Treasury  practically  depleted  and  the 
financial  reserves  on  a  strain,  what  will  save  from  the  recurrence  of  a 
"  Black  Friday"? 

Secretary  Windom  said,  in  his  last  address,  at  the  New  York  banquet : 
"Had  it  not  been  for  the  peculiar  conditions  which  enabled  the  United 
States  Treasury  to  disburse  over  $75,000,000  in  two  and  one-half  months 
last  fall,  the  stringency  would  have  resulted  in  widespread  financial  ruin." 

It  is  asserted  that  a  few  men  in  New  York  control  enough  money  on  call 
to  precipitate  a  panic,  or  close  most  of  the  banks,  at  any  time. 

Money  owners  will  fight : 

First — To  make  money  scarcer,  by  retiring  National  notes. 

Second— To  keep  the  finances  as  they  now  are,  saying  matters  are  good 
enough. 

Third—Will  try  to  shape  legislation  so  as  to  place  the  money  issue 
under  their  control  at  some  concealed  point. 

Fourth — Will  use  every  strategy  to  delay  legislation  from  year  to  year, 
in  the  mean  time  reaping  rich  harvests  from  forced  failures. 

It  was  published  in  the  newspapers  at  the  time,  that  when  the  Adminis- 
tration was  arranging  to  put  out  the  United  States  bonds,  in  the  war 
crisis,  the  money  power,  in  a  contest,  said  to  Secretary  Chase  :  "Unless 
you  do  this  as  we  demand,  we  will  throw  our  influence  in  favor  of  the  Con- 
federacy, float  their  bonds,  and  break  the  United  States  in  two."  Their 
dictation  was  acceded  to  at  onqp,  to  the  Nation's  loss  by  the  millions. 

"When  the  Geneva  award  had  been  made  and  the  United  States  had 
$15,000,000  to  its  credit  in  the  vaults  of  the  Bank  of  England,  Boutwell,  then 
Secretary  of  the  Treasury,  wanted  to  bring  the  gold  over  to  this  country  ; 
but,  according  to  his  own  statement,  the  bank  notified  him  that  if  any 
attempt  were  made  to  bring  that  gold  over  bodily,  in  specie,  the  whole 
power  and  influence  of  the  Bank  of  England  would  be  arrayed  against  the 
proceeding."  And  Boutwell  was  compelled  to  obey  the  orders  of  the  Bank 
of  England. 

While  we  are' now  at  peace,  we  should  so  establish  our  finances  that 
our  Nation  cannot  be  cornered  in  time  of  danger. 

DEMONETIZATION   OF    PAPER. 

The  free-coinage  advocates  have  very  forcibly  shown,  that  some 
influence  demonetized  silver  in  1873,  by  legislative  shrewdness,  in  full  view 
of,  and  by  act  of,  Congress. 

The  scheme  was  of  further  reach.  It  contemplated  demonetization  of 
paper  money,  in  this  way  :  allowing  the  United  States  bonds  to  expire,  and 
thus  retiring  the  National  bank  note  circulation  of  some  $300,000,000,  and 
then  preventing  the  Nation  issuing  legal  tender. 

This  would  reduce  our  total  volume  to  about  $600,000,000  gold  coin. 


NATIONAL  CURRENCY  25 

The  scheme  seems  to  have  been  far  advanced,  when  the  free-coinage 
men  discovered  the  situation  and  succeeded  in  increasing  our  volume  by 
•about  $370,000,000  silver  certificates. 

The  fight  of  the  contractionists  was  thorough,  but  they  went  down  before 
an  honest  Congress,  as  soon  as  Congress  understood  the  situation. 

The  great  issue  now  is,  Shall  paper  money  be  demonetized  by  non- 
action  or  in  an  open  fight? 

It  will  readily  be  seen,  as  a  conclusion  from  the  facts  stated  in  the  three 
preceding  chapters,  that  it  is  the  volume  of  money  that  regulates  prices 
and  business :  and  not  the  material  out  of  which  the  money  is  made,  nor 
the  commercial  value  of  the  article  used  to  receive  and  carry  the  Nation's 
fiat. 

The  great  struggle  by  each  nation  and  community  is  to  get  and  keep  a 
sufficient  volume.  On  this  depends  the  price  and  stability  of  all  other 
things,  except  as  affected  specially  by  supply  and  demand.  It  is  of  small 
concern  to  keep  gold  and  silver  at  a  steady  commercial  price.  The  worry 
is  to  keep  all  the  other  millions  of  articles  at  a  steady  price. 

Are  the  free-coinage  advocates  willing  to  demonetize  paper?  After  the 
public  censure  they  have  given  the  gold  men,  relating  to  the  demonetization 
of  silver  for  selfish  purposes,  will  they  advocate  the  demonetization  of  a 
larger  sum  of  paper  money  ?  Recent  utterances  of  some  of  the  silver 
advocates  would  indicate  such  to  be  the  tendency. 


The  most  critical  period  in  the  history  of  the  present  political  parties  that 
has  arisen  since  the  war  will  occur  in  this  session  of  Congress%  and  on  this 
question  of  increased  volume  of  money. 


CHAPTER  IV. 
REMEDIES. 

FREE  COINAGE  —  CHECK  AND  BANK -CREDIT  PLAN  — 507.  2%  BONDS  — 
CLEARING-HOUSE  PLAN  —  LAND  LOANS  —  SUB-TREASURY  —  A  NA- 
TIONAL BANK  OF  ISSUE  —  GOLD  AND  SILVER  BASIS  —  SUGGESTED- 
LEGISLATION — A  CONSTITUTIONAL  AMENDMENT — COMMENTS. 

As  heretofore  shown,  there  is  not  enough  gold  and  silver  in  the  world 
to  supply  a  sufficient  volume  of  money  for  the  world. 

As  a  nation  we  have  three  times  our  pro-rata,  while  other  nations  have 
a  debt  per  capita  many  times  greater  than  ours.  They  must  have  coin  ta 
pay  interest  and  principal.  Hence  both  of  these  causes  operate  to  send 
our  coin  abroad.  This  fluctuating  commercial  value  of  gold  and  silver 
will  disturb  our  volume.  The  output  of  mines  is  hopelessly  insufficient  to 
meet  the  demand. 

The  only  remedy  is  to  issue  a  sufficient  volume  ot  paper  money  by 
authority  of  the  Nation,  guarding  it  against  inflation,  contraction,  or  repu- 
diation. 

Numerous  measures  have  been  suggested  by  which  an  increased  vol- 
ume of  money  may  be  had. 

If  any  class  of  persons  or  corporations  can  have  the  law  formed  so  as. 
to  give  them  the  control  of  the  volume,  or  of  its  circulation,  they  will  spare 
no  effort  to  accomplish  that  object. 

Many  of  the  remedies  proposed,  either  intentionally  or  otherwise,  con- 
tain very  objectionable  features :  by  which  classes  or  corporations  will  reap 
rich  harvests,  at  the  cost  of  the  public,  and  no  general  relief  be  given  to 
the  Nation  at  large. 

Among  these  we  call  attention  to  the  following  : 

FREE     COINAGE. 

Free  coinage  of  silver  cannot  give  the  required  volume.  The  advocates 
allege  that  no  foreign  silver  will  come  into  our  mints  under  free  coinage. 
The  act  of  July  14,  1890,  requires  the  purchase  of  our  own  silver  product. 
Senator  Stewart,  of  Nevada,  says  in  the  June  Forum:  "The  addition  to 
our  circulating  medium  up  to  the  present  time  which  free  coinage  would 
have  caused  would  not  have  exceeded  fifteen  million  dollars";  and,  "The 
most  serious  objection  to  metallic  money  is  the  want  of  a  sufficient  supply.'* 

Most  of  the  advocates  of  free  coinage  concur  in  the  same  facts. 

The  only  thing  left  to  contend  for  is,  Shall  the  people,  as  at  present, 
buy  the  silver  for  money  use  at  97  cents  per  ounce  ;  or  shall  they,  by  free 
coinage,  raise  the  price  against  themselves  to  $1.29  per  ounce  ?  Additional 
price  paid  for  silver  will  not  materially  increase  its  volume. 


NATIONAL  CURRENCY  2? 

The  great  objection  to  free  coinage  is  that  our  annual  product  available 
for  coinage  in  the  market  is  worth  146,000,000,  but  when  coined  is  worth 
$64,000,000 ;  a  profit  of  $  18,000,000  added  by  the  mint.  The  real  contest 
is,  Shall  the  people  have  the  advantage  of  this  $18,000,000,  or  shall  they 
pass  an  act  and  donate  it  to  the  silver  owners  ? 

Congress  very  wisely  framed  a  law  buying  all  the  silver  crop  at  its 
market  value  for  money  use,  and  made  for  the  people  the  profit  that  arises 
by  reason  of  their  using  it  as  money. 

The  saving  in  fifty  years  at  five  per  cent  interest  would  amount  to  the 
enormous  sum  of  $10,993,695,800. 

The  advocates  urge  that  free  coinage  will  cause  this  difference  to  disap- 
pear. So  it  will :  by  transferring  it  from  the  buyer  (the  people)  to  the 
benefit  of  the  seller  (the  silver  owner).  That  is,  a  free-coinage  act  of 
Congress  is  worth  32  cents  per  ounce,  and  silver  is  worth  the  other  97  cents. 

The  silver  belongs  to  the  silver  men,  and  the  act  of  Congress  belongs 
to  the  people.  The  silver  owners  ask  the  people  to  donate  them  an  act  of 
Congress  worth  32  cents  per  ounce  of  silver,  and  let  the  people  pay  them 
for  the  whole  thing. 

As  well  should  the  American  Bank-note  Paper  Company,  which  pro- 
duces all  the  bank-note  paper,  under  patents,  be  allowed  to  have  paper 
free-pressed  (i.  e.  free-coined)  with  Government  money  plates,  under  an  act 
of  Congress,  and  own  all  of  the  money  thus  issued.  It  is  not  that  way. 
The  United  States  buys  the  paper  at  its  commercial  value,  and  imprints  it 
into  money,  as  it  now  does  silver  and  as  it  should  do  with  gold. 

Why  should  the  people  advance  the  price  of  silver  on  themselves,  or 
give  gold  and  silver  the  monopoly  of  money  use,  and  demonetize  paper  > 

There  is  certainly  nothing  more  of  value  in  the  silver  question  than 
what  the  people  now  have  ;  and  under  no  circumstances  can  it  give  the 
volume  required  for  the  business  of  the  country. 

CHECK    AND    BANK-CREDIT    PLAN. 

Some  financiers  propose  that  checks  and  bank  credit  are  the  proper 
remedy ;  and  cite  the  fact  that  about  95  per  cent  of  the  business  of  iSga 
was  done  by  checks  and  bank  credits. 

Well,  was  it  not  a  most  calamitous  year  on  credits?  It  demonstrates 
that  95  per  cent  of  credit  is  too  near  the  danger  line  for  safe  business.  Five 
per  cent  of  cash  was  not  enough  to  go  around  on  pay  day.  Hence  there 
was  over  $10,000,000,000  loss  in  one  year,  in  shrinkage  of  value,  and  it 
called  in  the  full  finaritfel  money  power  of  the  United  States  to  prevent 
general  ruin. 

Back  of  this  credit  was  only  the  shifting  and  personal  responsibility  of 
individual  firms  and  corporations,  and  a  fraction  of  a  cent  on  the  dollar  on 
the  volume  of  business  for  final  liquidation. 

The  volume  of  money  was  not  sufficient  to  sustain  the  volume  of  credit. 
The  same  relation  exists  between  the  volume  of  money  and  credit,  as  ex- 
ists between  a  bank  reserve  and  deposits. 

If  checks  and  bank  credit  are  the  remedy,  why  were  they  not  applied  to 
stop  the  panic  in  1890?  Why  was  the  United  States  Treasury  called  on  for 
more  money  ? 


2S 


NATIONAL  CURRENCY 


This  whole  plan  is  only  a  scheme  by  which  banks  issue  a  form  of  circu- 
lating medium,  paying  no  interest  therefor,  and  charging  full  current  inter- 
est rates  for  its  use. 

Thisscheme  embraces  all  the  evils  of  the  John  Law,  French  Assignats, 
Cedulas,  Continental  money,  and  old  state  bank  systems  combined. 

It  also  embodies  the  worst  and  most  dangerous  forms  of  contraction, 
repudiation  and  inflation,  of  both  money  and  speculation,  that  ever  floated 
out  of  chaotic  financeering. 

In  .a  word,  it  is  the  most  complete  wildcat  money  and  money  system 
ever  turned  loose  on  a  community. 

The  background  of  this  scheme  is  to  give  banks  absolute  despotism  over 
the  money  interests  of  the  Nation — a  complete  corner  on  money. 

FIFTY-YEAR  TWO-PER-CENT  BONDS. 

This  is  simply  a  scheme  to  aid  banks  at  the  expense  of  the  people,  and 
seems  to  have  its  origin  and  backing  in  the  secret  councils  of  those  who 
wish  to  monopolize  the  money  system  of  the  United  States. 

Look  at  it.  Its  advocates  say :  "  Issue  these  bonds  and  sell  them,  and 
redeem  the  4-per-cent  bonds,  and  let  the  National  banks  buy  the  2-per-cent 
bonds  as  a  basis  of  circulation. "  How  will. it  work  ?  Will  the  owner  of  4- 
per-cent  bonds  exchange  even  for  2-per-cent  bonds  ?  Certainly  not.  Then 
if  you  sell  the  2-per-cent  bonds  at  par  and  pay  a  premium  on  the  4-per-cent 
bonds,  you  will  have  to  pay  all  the  4-per-cent  ones  will  earn  up  to  maturity. 
We  will  then  be  paying  6  per  cent  instead  of  4  per  cent  as  now,  and  that 
does  not  increase  our  circulating  medium  a  dollar.  The  people  are  simply 
saddled  with  more  interest. 

The  sale  of  2-per-cent  bonds  to  banks  as  a  basis  of  circulation  is  a  rob- 
bery of  the  people.  To  illustrate :  The  United  States  issues  say  $100,000 
in  2-per-cent  bonds ;  you,  wishing  to  open  a  bank,  take  $100,000  cash,  now 
in  circulation,  and  pass  it  over  to  the  United  States  for  the  $100,000  in 
bonds.  Next  you  hand  back  your  bonds  as  a  deposit,  and  get  back  your 
$100,000  cash  for  a  bank  capital,  and  for  fifty  years  the  tax  payers,  through 
the  Government,  pay  you  2  per  cent  per  year,  $100,000  interest  on  the  bonds^ 
for  doing  a  banking  business  on  your  original  $100,000.  If  you  use  the 
semi-annual  interest  to  buy  more  bonds,  so  as  to  make  it  compound,  you 
will  at  the  maturity  of  the  bonds  have  your  original  $100,000,  plus  $100,000 
interest,  plus  about  $70,895  bonds  bought  with  interest  on  interest ;  making 
a  total  profit  of  $170,895  for  doing  business  on  your  own  money.  But  dur- 
ing this  fifty  years  your  original  $100,000  will  be  loaned  out  to  the  same  tax 
payers  who  are  paying  2-per-cent  interest  on  the  bonds  to  you.  This  loaned- 
out  capital  will  bring  in  ruling  rates  ;  which,  by  the  scarcity  of  money,  will 
be  high. 

This,  with  the  profits  arising  from  the  periodical  wrecking  of  business, 
ought  to  satisfy  the  owners  of  money.  It  will,  however,  engender  the 
thought  among  the  masses  that  the  banks  should  be  killed  off.  Our  present 
banking  capital  is  some  $700,000,000,  At  the  end  of  fifty  years,  operating 
under  this  bond  scheme,  the  banks  will  own  their  bank  stock  of  $700,000,- 
ooo,  plus  $1,196,265,000  interest  on  bonds,  plus  $3,000,000,000  interest  on  the 
capital  stock  for  fifty  years.  That  is,  the  banks  wiil  own  all  the  money  in 


NATIONAL  CURRENCY  29 

the  United  States,  and  have  the  people  in  debt  to  them  nearly  $3,000,000,000. 
The  scheme  gives  to  the  holders  of  the  bonds  a  monopoly  of  the  National 
bank  system,  as  none  but  the  owners  of  bonds  can  start  a  bank. 

You  perceive  at  once  that  this  scheme  will  not'increase  our  circulating 
medium.  This,  however,  is  not  as  costly  to  the  people  as  the  proposed 
silver  bill,  which  in  fifty  years  costs  over  $10,000,000,000  extra. 

Another  plan  to  place  the  money  power  in  the  hands  of  a  few  is  the 

CLEARING-HOUSE  PLAN. 

It  is  embodied  in  a  proposed  National  clearing-house  system,  to  be 
incorporated  under  an  act  of  Congress,  by  which  a  confederation  of  banks 
can  put  up  approved  collateral  with  the  clearing  house  and  receive  clearing- 
house notes,  to  be  legal  tender ;  the  combined  clearing  house  being  re- 
sponsible for  redemption  in  case  the  individual  bank  fails  to  redeem.  This 
system  is  put  forth  by  a  prominent  Eastern  banker,  who  asserts;  "  We  need 
no  more  money."  Yet  this  whole  scheme  is  to  increase  the  circulating 
medium,  but  giving  the  banks  a  monopoly  of  issuing  and  controlling  it. 
Its  weak  point  is  in  placing  back  of  our  currency  no  greater  responsibility 
than  the  banks  and  their  property.  It  also  gives  the  banks  the  right  to 
obtain  money  without  interest  and  loan  it  on  interest.  It  is  a  corner  on 
money  under  a  thin  disguise. 

Better  let  the  Government  issue  the  money,  with  the  resources  and 
wealth  of  the  whole  people  of  the  United  States,  valued  at  $71,000,000,000, 
back  of  it  for  redemption.  If  the  property  of  a  combination  of  banks  back 
of  a  money  issue  is  good,  then  the  wealth  of  a  nation  back  of  the  issue  is 
better. 

As  a  nation  we  want  no  money  for  the  people  which  is  only  backed  by 
the  responsibility  of  a  small  part  of  the  people,  having  absolute  control  of 
it  for  selfish  ends. 

LAND     LOANS. 

This  scheme  has  some  sound  points  in  it.  Land  can  be  safely  used  as 
a  security  in  a  National  bank  system,  as  well  as  bonds.  Allowing  the  title 
to  land  at  a  valuation  of,  say,  its  average  assessed  value  for  the  preceding 
five  years,  and  not  to  exceed  one-half  its  cash  value,  to  be  pledged  to  the 
Government  under  the  form  of  a  National  bank  incorporation,  would  give 
relief  to  the  farming  communities. 

It  would  substitute  a  National  bank  for  a  Sub-Treasury ;  a  set  of  bank 
officers  elected  by  the  farmers  for  their  banks  to  manage  the  loans  for  a 
set  of  Sub-Treasury  agents ;  a  responsibility  to  the  Government  for  large 
aggregate  sums  under  the  bank  laws,  instead  of  the  inspection  of  thou- 
sands of  small  changing  loans.  The  supervision  of  the  Bank  Examiners 
under  the  present  laws  as  to  the  solvency  of  the  bank  would  be  all  that 
was  required,  while  the  bank  officers  would  supervise  all  detail  business 
and  loans  to  individuals.  (See  Sec.  8  to  12  of  proposed  Article.) 

The  objection  to  the  Sub-Treasury  scheme  is  that  it  is  local  and  parti- 
san, and  only  helps  one  class  instead  of  all  classes.  There  is  also  no  limit 
to  the  issue,  and  it  is  open  to  the  worst  form  of  inflation.  It  does  not 


3o  NATIONAL  CURRENCY 

increase  our  volume  of  money.  It  is  a  plan  to  loan  money.  The  issue  is 
secondary. 

The  circulating  medium  should  be  issued  by  the  authority  of  the  whole 
population,  and  should  be  backed  by  the  entire  wealth  of  the  Nation :  and 
should  be  controlled  for  the  common  benefit  of  all,  and  limited  constitu- 
tionally to  a  safe  amount.  The  2-per-cent  bond  system — the  free-coinage 
system— the  National  bank,  clearing-house  issue,  and  Sub-Treasury  plans — 
fail  because  they  are  in  the  interest  of  localities  and  minorities.  If  tempo- 
rarily successful  they  will  soon  be  destroyed  by  the  majority  as  unjust. 

Justice  and  equity  to  all  must  be  at  the  foundation  of  any  system  adopted 
by  our  Nation. 

At  present  the  United  States  Treasury  throws  its  reserve  power  to  sup- 
port the  Eastern  banks.  It  is  very  probable  that  the  West  would  be  denied 
any  such  relief  in  an  emergency.  Over  $30, 000,000  of  United  States  money 
is  in  banks  without  interest,  and  largely  without  security.  The  recent 
panic  demonstrated,  both  in  the  United  States  and  England,  that  at  times 
the  power  of  the  Nation  must  come  to  the  financial  relief  of  the  people. 
This,  then,  should  be  put  in  a  legislative  system,  on  safe  principles,  within 
the  reach  of  all  parts  of  the  country,  for  the  common  good. 

A   NATIONAL   BANK    OF   ISSUE 

Composed  by  all  other  banks  taking  stock  in  it,  to  issue  notes  under  an 
act  of  Congress  making  them  legal  tender.  This  is  the  clearing-house 
plan  in  another  form,  elaborated  somewhat  to  take  in  more  banks  and 
popularize  it  in  banking  circles.  It,  like  the  other,  must  have  an  act  of 
Congress  to  give  to  its  issue  of  notes  a  legal  tender.  As  another  form  under 
which  to  corner  the  money,  and  bank  system,  it  would  be  a  success. 

It  is  the  same  middle-man  business.  If  the  Nation  can  issue  legal 
tender  notes  through  such  a  round-about  way,  it  can  issue  them  direct  on 
the  wealth  of  the  whole  people,  including  all  the  banks  as  assets.  If  it  is 
safe  to  let  a  limited  number  of  banks  handle  the  issue  of  money,  it  can  be 
made  safe  for  all  others  to  help  handle  the  issue  on  common  terms. 

There  is  no  merit  in  it.  It  admits  the  authority  of  the  Nation  as  the 
only  source  of  issue,  but  asks  the  monopoly  of  the  exclusive  handling 
thereof. 

GOLD   AND   SILVER   BASIS. 

An  issue  of  paper  money  based  on  gold  and  silver,  dollar  for  dollar, 
gives  no  increase  in  volume. 

Every  dollar  of  paper  money  issued  locks  up  a  dollar  of  coin  for  redemp- 
tion, as  our  present  silver-certificate  plan.  This  scheme  is  solely  in  the  in- 
terest of  the  coin  owners,  and  is  designed  to  keep  the  volume  as  small  as 
possible.  It  is  a  direct  effort  to  contract  the  money  volume  to  narrower 
limits  than  at  present,  by  demonetizing  our  unsecured  paper  issue. 

The  second  step  in  this  plan  is  to  issue,  say,  three  dollars  of  paper  for 
one  in  coin  held  for  redemption. 

The  financial  effect  of  this  is,  that  when  one-third  of  the  issue  is 
redeemed,  then  there  is  not  a  dollar  of  coin  to  back  the  other  two-thirds  ; 
which  are  then  really  backed  by  the  wealth  of  the  Nation  alone. 


NATIONAL  CURRENCY  31 

The  volume  of  money  under  this  plan  is  regulated  by  the  output  of  the 
mines.  The  gold  and  silver  mines  are  owned  principally  by  a  limited  num- 
ber of  wealthy  people. 

It  is  asserted  that  citizens  of  England  own  most  of  the  leading  gold  and 
silver  mines  in  the  United  States.  The  owners  of  these  mines  can  at  any 
time  stop  the  output  or  ship  it  abroad,  and  thus  limit  and  contract  our 
money  supply.  This  scheme  could  be  very  cleverly  worked  to  aid  in 
cornering  the  money  of  the  country. 

Gold  and  silver  are  not  the  basis  of  money.  They  are  only  a  part  of 
the  merchandise  of  the  Nation.  It  is  the  whole  wealth,  power,  and  good 
faith  of  the  Nation  that  gives  money  its  value.  Gold  and  silver  represent 
about  one-seventieth  of  the  Nation's  wealth.  Our  total  wealth  is  $1,000,- 
000,000  in  coin  and  $70,000,000,000  in  other  property.  If  the  first  is  good 
back  of  our  paper  money  alone,  it  is  better  when  the  other  is  added. 

The  true  plan  is,  place  all  of  our  gold,  silver,  real  estate,  improvements 
and  National  wealth,  of  some  $71,000,000,000,  back  of  our  money  issue 
direct,  and  for  the  benefit  of  the  people.  The  greatest  danger  in  the  full 
solution  of  the  money  question  is  that  the  gold  and  silver  men  will  combine 
to  demonetize  currency  in  favor  of  gold  and  silver.  No  one  supposes  that 
silver  coin  will  ever  be  used  as  money  to  any  great  extent.  What  the  silver 
men  want  is  paper  money,  backed  by  the  wealth  of  the  Nation,  issued  to 
them  for  their  silver  at  a  par  with  gold.  They  do  not  want  their  silver 
coined  and  delivered  to  them  for  circulation.  They  know  it  will  not  circu- 
late on  account  of  its  bulk.  They  want  paper  money  for  it,  at  an  advance 
on  its  market  value. 

SUGGESTED    LEGISLATION. 

In  preparing  the  proposed  amendment  to  the  Constitution  and  bill  for 
Congress,  I  have  retained  the  safeguards  in  the  money  systems  of  the 
United  States,  England,  France  and  Germany,  and  have  added  such  meas- 
ures as  will  give  a  uniform,  practicable,  elastic  system,  free  from  inflation 
of  currency  or  speculation,  free  from  contraction,  repudiation,  or  a  change 
of  a  standard  of  value  ;  using  all  of  our  gold  and  silver,  and  supplement- 
ing their  use  by  a  safe  volume  of  paper  money,  representing  about  two 
cents  on  the  dollar  of  our  National  wealth  ;  so  issued  and  circulated  that 
no  class  or  section  has  any  advantages  over  the  others.  . 

A    CONSTITUTIONAL    AMENDMENT 

Should  be  placed  at  the  foundation  of  any  proposed  system. 

The  greatest  danger  in  our  present  system  is  the  doubt  of  the  Consti- 
tutional power  of  Congress  to  make  paper  a  legal  tender.  The  United 
States  Supreme  Court  decided,  by  five  justices  to  three,  that  Congress  had 
ho  power  to  make  paper  money  a  legal  tender,  Chief  Justice  Chase  ren- 
dering the  opinion.  [Hepburn  vs.  Griswold,  8  Wall.  603-639  ] 

One  of  the  five  resigned;  Congress  increased  the  number  of  judges 
from  eight  to  nine  ;  the  two  vacancies  were  filled  by  men  who,  joining  the 
opinion  of  the  minority,  held  that  as  a  war  measure  Congress  had  power 
to  make  paper  money  a  legal  tender.  [Knox  vs.  Lee,  12  Wall.  457-480.] 

This  decision  stood,  five  justices  to  four.  Three  more  of  the  four  died, 
and  their  places  have  been  filled  by  those  who  believe  in  this  power  ;  and 


32  NATIONAL 

in  its  latest  decision  the  Court  holds  that  Congress  has  unlimited  power  ta 
issue  paper  money  a  legal  tender  in  any  desired  volume. 

Here  is  the  danger  of  the  John  Law,  Argentine  Republic,  and  Conti- 
nental money  schemes :  inflation  without  limit.  Even  now  are  proposed 
measures  that  have  no  limit  to  the  currency  issue.  A  future  administration, 
appointing  judges  who  took  a  different' view  of  the  law,  could  at  any  time 
overrule  the  decisions  and  hold  that  Congress  had  no  such  power,  and  tint 
the  whole  currency  issue  was  unconstitutional  and  void,  and  not  even  a 
claim  against  the  Nation.  Here  is  one  of  the  dangers  of  contraction  or 
repudiation.  Such  a  decision  would  leave  gold  and  silver  money  in  abso- 
lute control,  and  debtors  would  be  at  the  mercy  of  creditors. 

The  danger  of  inflation,jcontraction,  repudiation,  or  change  in  the  stand- 
ard of  values,  must  be  constitutionally  removed  from  our  system. 

A  safe,  stable  money  system  is  one  of  the  essential  elements  of  pros- 
perity for  this  Nation.  The  system  must  stand  before  the  people  of  this 
and  other  nations,  founded  upon  and  guarded  by  constitutional  power ; 
protecting  it  from  these  dangers  and  pledging  the  faith  and  wealth  of  the 
Nation  back  of  the  issue  as  the  will  of  the  Nation  to  exchange  gold,  silver 
and  currency  at  par  when  required  in  business. 

An  amendment  worded  about  as  follows  would  cover  the  ground: 

PROPOSED  CONSTITUTIONAL    AMENDMENT. 
ARTICLE  XVI. 

SECTION  i.  A  National  currency  circulating  medium  shall  be  issued  to 
the  amount  of  twenty  dollars  per  capita,  as  shov/n  by  the  census  of  1890, 
and  by  each  succeeding  census,  for  the  proper  redemption  of  which,  when 
required,  the  resources,  the  faith  and  the  property  of  the  Nation  are 
pledged ;  for  which  redemption,  Congress,  by  a  two- thirds  vote  of  each- 
house,  may  provide  for  the  collection  of  Government  revenues  and  taxes 
in  gold  and  silver  coin. 

SEC.  2.  Said  currency,  with  gold  and  silver  coin  of  these  United  States, 
of  present  weight  and  fineness,  the  gold  dollar  being  the  standard  or  unit  ot 
values,  and  such  currency  as  may  be  issued  in  lieu  of  gold  and  silyer  coin, 
or  bullion  held  exclusively  for  exchange  for  currency,  shall  constitute  the 
only  legal  money  of  these  United  States  ;  and  shall  be  received  at  par  in 
satisfaction  of  all  obligations  for  the  payment  of  money  within  the  jurisdic- 
tion of  these  United  States.  Said  gold  and  silver  coin  and  currency  shall 
be  exchangeable  at  par  value. 

SEC.  3.  Congress  shall  have  power  to  enforce  this  article  by  appropriate 
legislation,  but  shall  not  have  power  to  increase  or  decrease  said  issue  ; 
provided,  that  after  the  issue  of  1900,  Congress  may,  by  a  two-thirds  vote  of 
each  House,  reduce  the  additional  issue  per  capita  at  any  census. 

COMMENTS. 

This  amendment,  underlying  our  National  system  of  finances,  would 
give  us  the  best  foundation  and  safeguards  ever  yet  adopted  by  any  nation. 

Section  i  makes  the  money  constitutional.  No  congress,  and  no  court, 
can  ever  cast  a  cloud  upon  it. 

By  fixing  the  volume  per  capita,  it  guards  against  the  dangers  of  the  John 
Law,  Argentine  Republic,  or  other  systems,  that  have  wrecked  the  finances, 
of  nations  using  paper  money,  by  inflation. 


NATIONAL  CURRENCY  33 

It  also  provides  that  the  volume  at  each  census  can  be  increased  to  the 
standard  per  capita.  This  prevents  contraction  from  increase  of  popula- 
tion. 

It  also  pledges  the  faith  of  the  Nation  to  use  the  wealth  of  the  Nation 
for  redemption  when  needed.  This  prevents  repudiation. 

No  fixed  time  is  required  for  redemption.  To  redeem  means  to  reissue 
to  meet  further  money  wants. 

The  volume  of  $20  per  capita,  in  addition  to  gold  and  silver,  is  suggested. 
This,  with  our  present  $19  per  capita  in  coin,  would  give  us  a  volume  of 
about  $39  per  capita. 

France  uses  about  $50  per  capita,  and  is  not  larger  in  area  than  Texas  ; 
her  cities  closely  connected  by  lines  of  transit,  so  that  money  can  be  quickly 
sent  to  the  relief  of  any  point.  If  our  volume  were  $50  per  capita  it  would 
be  a  safe  volume.  This  amount  would,  however,  be  fixed  by  the  best 
judgment  of  Congress.  It  might  safely  be  left  to  a  two-thirds  vote  of  each 
House  to  control  the  issue  between  $20  and  $30  per  capita.  A  few  words 
added  in  Section  i  would  accomplish  this  object. 

Section  2  makes  the  money  a  legal  tender.  It  keeps  the  coin  at  present 
weight  and  fineness:  thus  preventing  the  coinage  from  being  debased  by 
extra  alloy  or  by  reducing  the  quantity  of  pure  metal  in  the  coins,  as  was 
several  times  done  in  France  and  England  and  once  in  the  United  States. 

It  also  allows  gold  and  silver  to  go  into  the  United  States  Treasury  and 
an  issue  of  currency  to  go  out  for  commercial  use ;  the  coin  to  be  held 
exclusively  for  exchange  for  currency,  as  the  Bank  of  England  does. 

This  section  also  fixes  the  gold  dollar  as  the  abstract  standard  of  value; 
it  at  the  same  time  does  full  justice  to  silver,  by  making  it  a  legal  tender 
equally  with  gold.  The  gold  dollar  is  today  the  standard  by  which  all 
values  in  the  United  States  are  rated  or  measured;  and  as  an  abstract 
standard  of  values,  this  amendment  removes  from  controversy  or  doubt 
that  disturbing  element  by  fixing  the  gold  dollar  as  the  standard  or  unit  of 
measure. 

The  double  standard  is  not,  and  really  never  was,  required.  The  use  of 
the  two  metals  on  equal  terms  as  money,  the  Government  being  responsible 
for  any  difference  in  the  commercial  values  of  the  metals,  is  all  that  can  be 
accomplished  by  law. 

When  a  gold,  silver  or  paper  dollar  is  issued,  the  people  make  the 
difference  in  the  commercial  value,  if  any,  and  when  exchanged  return  the 
difference. .  Neither  gold,  silver  or  paper  can  ever  be  demonetized  under 
this  amendment. 

Section  3  permits  Congress  to  control  the  increase  of  volume  within  the 
fixed  constitutional  limit,  to  meet  the  increase  of  population  after  1900. 
This  will  protect  against  too  much  money,  and  is  safely  lodged  in  a  two- 
thirds  vote  of  each  House. 

AS   GOOD   AS   GOLD. 

No  nation  can  place  back  of  its  issue  such  security  as  this  amendment 
would  give  to  American  money.  England  cannot  back  an  issue  with  the 
resources  of  Canada,  Australia,  India,  or  her  African  posessions:  for  at 


34 


NATIONAL  CURRENCY 


any  time  they  might  leave  England  and  set  up  for  themselves,  leaving 
only  the  little  island  responsible  for  the  currency  issued. 

France  or  Germany  is  too  small.  Russia  is  too  insecure.  But  the 
United  States,  with  its  vast  area,  its  peaceful  and  stable  form  of  government, 
its  citizens  each  an  owner  in  the  currency,  is  in  a  position  to  issue  a  cur- 
rency that  would  be  received  by  any  nation  as  a  medium  of  exchange,  a 
representative  of  gold  at  par.  Such  a  legal-tender  note  is,  in  money  effect, 
the  clearing-house  certificate  of  the  Nation,  backed  by  the  National  wealth, 
good  in  any  clearing  house  in  the  United  States ;  instead  of  a  certificate 
backed  by  any  number  of  banks,  and  only  good  where  they  wish  to  accept 
it  by  common  consent. 

Such  a  note  has  the  legal  effect  of  a  check  signed  by  the  authority  of 
the  United  States,  backed  by  over  $71,000,000,000  of  the  people's  wealth, 
good  at  any  counter  of  any  bank;  instead  of  an  individual's  check,  good 
only  where  he  is  known,  or  at  his  own  bank.  It  is  the  promissory  note  of 
the  Nation,  secured  by  a  constitutional  mortgage  on  over  2,500,000,000 
acres  of  land,  with  the  cities,  railroads  and  improvements  and  civilization 
thereon,  payable  to  bearer  and  good  from  any  debtor  to  any  creditor ;  in- 
stead of  the  private  note  of  a  corporation  or  citizen,  good  only  in  porpor- 
tion  to  his  ability  to  pay  it,  and  discounted  when  he  wants  to  use  it. 

It  is  the  representative  of  all  values  or  damages,  for  exchange  purposes, 
mutually  agreed  upon  by  62,000,000  people  for  their  joint  and  mutual  bene- 
fit; backed  by  a  constitutional  bond  to  secure  redemption  when  required, 
on  which  bond  the  people  pay  no  interest. 

Such  a  currency  circulating  medium  possesses  all  the  elements  of  safety 
offered  in  all  the  other  proposed  systems  combined,  and  many  others  that 
cannot  be  introduced  into  any  other  system,  and  is  as  good  as  gold. 

The  general  plan  proposed  is  this: — 

A  total  volume  of  money  of  $2,500,000,000;  of  which  there  is: 

Coin  in  the  United  States $i,  180, 240,077 

Issue  legal-tender  paper i, 319, 7 59,923 

Total $:2,5OO,OOO,OOO 

As  the  coin  or  bullion  comes  into  the  United  States  Treasury,  issue 
more  legal-tender  paper  therefor.  So  if  all  the  coin  should  come  into  the 
Treasury  there  would  be  $2,500,000,000  legal-tender  paper  in  circulation, 
and  $1,180,240,077  coin  in  the  Treasury  to  exchange  at  any  time  in  taking 
up  the  paper  legal-tender. 

As  a  matter  of  fact,  the  coin  would  never  be  all  at  once  either  in  or 
out  of  the  Treasury;  but  would  flow  in  and  out  as  trade  required  it. 

If  the  paper  money  were  deemed  a  public  use  and  made  exempt  from  all 
taxation,  and  coin  were  subject  to  taxation  at  its  commercial  or  commodity 
value,  it  would  result  in  a  full  supply  of  coin  always  in  the  Treasury  to 
avoid  taxation.  This  would  be  the  cheapest  way  to  always  preserve  a  full 
coin  reserve.  This  non-taxation  of  currency  would  result  in  a  porportion- 
ately  lower  rate  of  interest,  and  would  fully  compensate  the  owners  and 
users  of  money,  as  well  as  the  tax  payers  on  other  property.  Money 


NATIONAL  CURRENCY  35 

generally  eludes  taxation  and  the  public  get  no  return  benefit ;  under  the 
above  plan  a  benefit  occurs  to  the  public  of  great  value. 

But  someone  will  say,  "What  will  prevent  gold  or  silver  going  above 
par?"  Nothing. 

These  metals,  as  to  their  commercial  value,  always  have  and  always  will 
fluctuate  according  to  market  demand.  The  banks  of  England,  France, 
Germany  and  Russia  have,  during  May,  June  and  July,  1891,  been  buying 
gold  and  paying  a  premium  on  it.  Paper  money  will  bring  a  premium  at 
times  for  special  purposes  ;  so  will  any  other  article. 

Under  the  system  proposed  these  laws  will  operate  as  they  always  have 
in  the  past :  but  the  increase  of  paper  money  will  lessen  the  demand  for 
coin  and  have  an  effect  in  steadying  its  commercial  value. 

Rhodes'  Banking  Journal  for  August,  1891,  says  : 

"  The  most  striking  feature  of  the  report  of  the  Bureau  of  Statistics  is  the 
large  excess  of  gold  exportation  for  the  fiscal  year  ;  being,  as  it  is,  the  largest 
excess  of  gold  exportation  in  any  one  year  within  the  history  of  the  country. 
The  excess  of  the  gold  export  amounted  to  $68,117,110.  This  indicates 
that  the  annual  gold  product  of  the  United  States,  and  about  thirty-eight 
millions  more  from  the  accumulated  stock  on  hand,  went  abroad." 


CHAPTER    V. 
PROPOSED  ACT  OF  CONGRESS. 


COPY  OF  BILL —  ISSUE  —  RETIRING — CANCELLATION — BANKS  —  BULLETIN 
OF  FINANCES— RECIRCULATION  OF  MONEY—  INSURANCE  —  NON-TAX- 
ATION OF  CURRENCY. 

It  is  a  rule  in  law  that  legislative  enactments,  to  produce  new  results, 
should  use  as  much  of  existing  laws  and  methods  as  possible;  for  the 
reason  that  we  are  familiar  with  what  has  been  in  use,  and  know  how  to 
use  it. 

Operating  under  this  rule,  I  have  taken  existing  laws,  as  shown  in  the 
act  of  June  3,  1864,  as  the  framework  of  a  new  or  complete  system  of 
finance  for  the  United  States  ;  and  have  added  to  it  such  sections  and  parts 
©f  sections  as  will,  with  the  proposed  amendment,  produce  a  comprehen- 
sive, uniform  system;  easily  understood  and  easily  operated  by  those 
familiar  with  existing  laws,  and  embracing  the  principles  set  out  in  the 
foregoing  pages. 

I  have  added  the  best  and  safest  features  from  the  English,  French 
and  German  finances,  and  have  carefully  excluded,  by  the  proposed  con- 
stitutional amendment,  the  financial  danger  of  the  John  Law,  French 
Assignates,  Argentine  Republic,  Continental  Currency,  Alabama  or  Mis- 
sissippi schemes  or  systems. 

The  system  can  use  all  of  our  American  output  of  gold  and  silver,  and 
a  supplemental  volume  of  paper  money  sufficient  in  quantity  to  safely  do 
the  business  of  the  Nation. 

The  paper  money  to  be  used  by  authority  of  the  people,  backed  by  the 
wealth  of  the  people,  and  circulated  for  the  benefit  of  the  people. 

All  present  forms  of  paper  money  to  be  taken  up  by  the  new  issue, 
uniform  in  appearance,  thus  getting  rid  of  seven  or  eight  different  kinds  of 
paper  money  now  in  circulation. 

That  the  reader  may  see  exactly  how  the  system  will  appear  when  form- 
ulated into  law,  I  have  appended  a  proposed  bill  in  full,  with  explanatory 
comments  under  each  section. 

My  system  is  based  on  the  following  analysis : 
I.    Issue. 
II.     Circulation. 

Under  the  head  of  Issue  I  provide,  constitutionally,  for  ; 

I.    Unquestioned  authority. 

(The  people  of  the  United  States.) 


NATIONAL  CURRENCY  37 

?.    Absolute  safety  from  : 
Inflation. 
Contraction. 

Change  of  the  standard  of  value. 
Repudiation. 

3.  Sufficient  volume : 

Say  $20  to  130  per  capita, 
in  addition  to  gold  and  silver. 

4.  Elasticity  of  volume : 

An  increase  at  each  census. 

(See  Amendment,  p.  32.) 

Under  the  head  of  Circulation  I  provide,  by  act  of  Congress,  for  circu- 
lation through : 

1.  Government  channels. 

2.  Commercial  channels. 

Under  Government  channels : 
(a)    Take  up  all  other  forms  of  paper  money. 
(3)    Meeting  usual  current  Government  expenses. 

(c]  Carrying  out  a  proper  National  system  of  public  improvements  of 
harbors,  rivers,  and  public  buildings,  in  each  locality  where  the 
United  States  has  permanent  post  offices  or  other  permanent  work ; 
building  a  navy  and  coast  defenses  (the  Congressional  Committee 
report  that  about  $500,000,000  will  be  used  in  this  work);  supplying 
money  for  the  benefit  of  all  the  people,  by  means  of  certain  2-per- 
cent bonds  issued  by  states,  counties  and  classed  cities,  and  pur- 
chased by  the  United  States. 

Circulation  through  commercial  channels  embraces  : 

(a)  A  banking  system,  under  National  inspection,  to  protect  as  well  as 
may  be  the  people  who  do  business  with  banks  ;  the  system  so 
organized  that  the  banks  can  place  certain  state,  county,  and  city 
bonds  and  real  estate  with  the  United  States  Treasury  (under  care- 
fully guarded  safety  conditions),  on  which  they  can  obtain  loans 
or  rediscounts  with  which  to  meet  fluctuating  demands  of  trade. 

(£)  The  banking  system  is  so  arranged  that  farmers  or  others  owning  lands 
can  obtain  loans  thereon  under  the  safeguards  of  a  banking  system. 

{c)  Inflation  of  business  is  provided  against,  by  increasing  the  rate  of 
interest  paid  to  the  Government  by  banks  on  each  additional  sum 
of  $50,000.  This  increasing  rate  of  interest  can  be  made  to  reach 
a  point  where  it  becomes  unprofitable  to  use  money,  forcing  a  cur- 
tailment of  business  instead  of  an  actual  destruction  of  established 
enterprises.  This  is  the  method  adopted  by  banks,  and  is  now 
adopted  in  the  German  system  of  finances. 


NATIONAL  CURRENCY 


Under  the  foregoing  analysis  it  will  be  seen  that  the  financial  plans  sug- 
gested by  other  writers  are  mainly  directed  to  some  subdivision  of  the 
department  of  circulation,  and  only  incidentally  refer  to  issue. 

Hon.  Mr.  Harter's  plan  only  refers  to  a  partial  method  of  issue  and 
circulation. 

The  Sub-Treasury  plan  refers  principally  to  circulation,  based  on  non- 
perishable  farm  products. 

The  land-loan  plan  refers  to  circulation  based  on  lands  alone. 

Hon.  Mr.  Norwood's  plan  is  limited  almost  entirely  to  circulation  by 
means  of  states. 

They  are  all  open  to  the  dangers  of  inflation,  contraction,  repudiation 
and  change  of  the  gold  standard  of  value,  and  leave  the  department  of  issue 
in  as  unsafe  and  chaotic  a  condition  as  it  now  is.  Now  that  Congress  has 
directed  attention  to  the  subject,  it  should  devise  a  system  complete  in  the 
department  of  issue  and  circulation,  with  the  gold  dollar  as  the  standard  or 
unit  of  value ;  using  gold,  silver  and  currency  for  a  circulating  medium, 
in  a  sufficient  volume  to  fully  meet  and  keep  pace  with  the  growing  wants 
of  the  business  of  the  country ;  founding  the  issue  of  currency  upon  the 
wealth  of  the  whole  Nation,  making  gold,  silver  and  currency  a  legal  ten- 
der and  exchangeable  at  par  on  demand  ;  and  fixing  by  a  constitutional 
amendment  the  legality  of  such  a  circulating  medium,  and  preventing  the 
dangers  of  inflation,  contraction  and  repudiation,  or  change  in  the  standard 
of  value. 

It  is  wholly  unnecessary  that  our  National  money  system  should  be  so 
framed  as  to  be  open  to  any  of  the  dangers  of  the  John  Law,  French  As- 
signat,  Argentine  Republic,  Alabama,  Mississippi,  old  state  bank  or  of  any 
other  system  that  has  failed. 

At  the  same  time,  it  is  not  difficult  to  embrace  in  our  system  all  of  the 
beneficial  principles  that  have  stood  the  working  test  of  time. 

The  scheme  formulated  by  me  in  a  proposed  constitutional  amendment 
and  act  of  Congress  is  the  result  of  a  careful  study  of  the  financial  schemes 
referred  to,  and  carefully  provides  against  their  dangers. 

It  embraces  the  best  features  of  the  systems  of  the  United  States,  Eng- 
land, France  and  Germany. 

If  it  were  adopted,  with  such  improvements  as  might  be  suggested,  it 
would  give  us  a  money  system  that  would  require  very  little  adjusting  in 
the  future,  and  that  would  satisfy  the  demands  of  our  civilization  and  busi- 
ness. But  it  will  not  give  a  special  benefit  or  monopoly  to  any  class  ;  all 
will  share  its  benefits  equally. 


See  pages  39  et  seq.  for  copy  of  proposed  bill  and  comments  thereon. 


PROPOSED  BILL. 

The  parts  in  italics  show  where  this  Bill  differs  from  present  act  of  June 
3,  1864.  The  part  not  in  italics  is  the  present  law. 

A  BILL 

TO   PROVIDE  A    NATIONAL    CIRCULATING    MEDIUM,    AND    TO    PROVIDE   FOR 
THE   CIRCULATION   THEREOF. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the  United 
States  of  America  in  Congress  assembled: 

^SECTION  i.  That  there  shall  be  established  in  the  Treasury  Department 
a  separate  Bureau,  which  shall  be  charged  with  the  execution  of  this  and  all 
other  laws  that  may  be  passed  by  Congress  respecting  the  issue  and  circula- 
tion of  a  National  circulating  medium.  The  chief  officer  of  said  Bureau  shall 
be  denominated  the  Comptroller  of  Finance,  and  shall  be  under  the  gen- 
eral direction  of  the  Secretary  of  the  Treasury.  He  shall  be  appointed  by 
the  President  of  the  United  States,  with  the  approval  of  the  Secretary  of 
the  Treasury,  by  and  with  the  consent  of  Congress,  and  shall  hold  his  office 
for  the  term  of  ten  years  unless  sooner  removed  by  the  President  with  the 
consent  of  Congress.  He  shall  receive  an  annual  salary  of  eight  thousand 
dollars ;  he  shall  have  a  competent  deputy  appointed  by  the  Secretary, 
whose  salary  shall  be  four  thousand  dollars  per  year,  who  shall  possess 
the  power  and  perform  the  duties  of  the  Comptroller  during  a  vacancy  in 
said  office  or  during  the  absence  or  inability  of  the  Comptroller.  The 
Comptroller  shall  employ,  from  time  to  time,  the  necessary  clerks  to  dis- 
charge such  duties  as  he  shall  direct.  Such  clerks  shall  be  classified  by 
the  Comptroller,  subject  to  the  direction  of  the  Secretary  of  the  Treasury, 
which  clerks  shall  be  classified  in  the  manner  now  prescribed  by  law.  Within 
fifteen  days  after  notice  of  his  appointment  he  shall  take  and  subscribe  the 
oath  of  office  prescribed  by  the  Constitution  and  the  laws  of  the  United 
States,  and  shall  give  to  the  United  States  a  bond  in  the  penal  sum  of  one 
hundred  thousand  dollars,  with  not  less  than  four  responsible  sureties,  to 
be  approved  by  the  Secretary  of  the  Treasury,  conditional  for  the  faithful 
discharge  of  the  duties  of  his  office.  The  Deputy  Comptroller  shall  also 
take  oath  of  office,  and  give  a  similar  bond  in  the  sum  of  fifty  thousand 
dollars.  The  Comptroller  or  Deputy  Comptroller  shall  not,  either  directly 
or  indirectly,  be  interested  in  any  association  doing  a  banking  business  un- 
der this  act. 

*This  section  is  the  present  law;  unchanged  except  as  to  the  Comptroll- 
er's salary,  which  is  changed  from  $5,000  to  $8,000,  and  the  Deputy's,  which 
is  raised  to  £4,000.  Many  think  that  the  salaries  should  be  much  greater 
so  as  to  secure  the  entire  attention  of  able  men.  These  sums  are  only  sug- 
gestive. 


40  NATIONAL  CURRENCY 

SEC.  2.    And  be  it  further  enacted : 

That  the  Comptroller  of  Finance,  with  the  approval  of  the  Secretary  of 
the  Treasury,  shall  devise  a  seal,  with  suitable  inscriptions,  for  his  office,  a 
description  of  which,  with  the  certificate  of  approval  by  the  Secretary  of 
the  Treasury,  shall  be  filed  in  the  office  of  the  Secretary  of  State,  with  an 
impression  thereof,  which  shall  thereupon  become  the  seal  of  office  of  the 
Comptroller  of  Finance,  and  the  same  may  be  renewed  when  necessary. 
Every  document  executed  by  the  Comptroller,  in  pursuance  of  any  author- 
ity confirmed  on  him  by  law,  and  sealed  with  his  seal  of  office,  shall  be  re- 
ceived in  evidence  in  all  places  and  courts  whatsoever ;  and  all  copies  of 
papers  in  the  office  of  the  Comptroller,  certified  by  him  to  be  correct  copies 
of  the  originals  in  his  office,  shall  in  all  cases  be  evidence  equally  and  in 
like  manner  as  the  originals.  An  impression  of  such  seal  directly  on  the 
paper  shall  be  as  valid  as  if  made  on  wax  or  wafer. 

SEC.  3.    And  be  it  further  enacted  : 

That  there  shall  be  assigned  to  the  Comptroller  of  Finance,  by  the  Sec- 
retary of  the  Treasury,  suitable  rooms  in  the  Treasury  Building  for  con- 
ducting the  business  of  the  Bureau  of  Finance,  in  which  shall  be  safe  and 
secure  fire-proof  and  burglar-proof  vaults  in  which  it  shall  be  the  duty  of 
the  Comptroller  to  deposit  and  safely  keep  all  plates  not  necessarily  in  the 
possession  of  engravers  and  printers,  and  other  valuable  things  belong- 
ing to  his  department ;  and  the  Comptroller  shall  from  time  to  time  furnish 
the  necessary  furniture,  stationery,  fuel,  light  and  other  proper  conveni- 
ences for  the  transaction  of  said  business. 

SEC.  4.     And  be  it  further  enacted : 

That  the  Comptroller  of  Finance,  under  the  direction  of  the  Secretary 
of  the  Treasury,  is  hereby  authorized  and  directed  to  issue  currency  notes 
in  the  name  of  the  United  States  of  America  to  the  amount  of  $20  per  cap- 
ita of  the  population  of  the  census  of  1890,  in  addition  to  gold  and  silver  coin. 
Upon  ascertaining  each  following  census  the  issue  shall  be  increased  to  said 
$20  per  capita.  In  addition  thereto  he  shall  issue  similar  currency  notes  in 
lieu  of  gold  or  silver  coin  of  the  United  States,  or  bullion  deposited  or  held 
exclusively  for  exchange  for  currency  notes  as  may  be  provided  by  law. 
In  order  to  furnish  suitable  notes  for  circulation  the  Comptroller  of  Finance 
is  hereby  authorized  and  required,  under  the  direction  of  the  Secretary  of  the 
Treasury,  to  cause  plates  and  dies  to  be  engraved,  in  the  best  manner  to  guard 
against  counterfeiting  and  fraudulent  alterations,  and  to  have  printed  there- 
from, on  paper  or  similar  material  best  adapted  therefor,  and  numbered,  the 
quantity  of  currency  notes,  of  the  denominations  of  one  dollar,  two  dollars, 
five  dollars,  ten  dollars,  twenty  dollars,  fifty  dollars,  one  hundred  dollars 
and  five  hundred  dollars,  as  may  be  required  to  supply  the  issue  herein 
called  for.  The  number  of  each  denomination  in  use  shall  be  such  that  the 
needs  of  the  people  shall  be  best  subserved  thereby.  The  notes  of  each  de- 
nomination shall  be  consecutively  numbered.  That  a  duplicate  of  each  de- 
nomination and  from  each  successive  plate  used  shall  be  perforated  with  the 
word  "duplicate"  and  carefully  preserved  for  use  in  the  identification  of  the 
originals,  and  for  the  detection  of  counterfeits,  by  comparison  therewith. 
Said  notes  shall  express  on  their  face  that  they  are  issued  by  the  Government 


NATIONAL  CURRENCY  41 

-of  the  United  States  of  America  as  the  circulating  medium  of  the  people -of 
ihe  United  States.  They  shall  have  the  written  or  engraved  signatures  of 
•the  Secretary  of  the  Treasury,  and  of  the  Comptroller  of  Finance,  and  the 
imprint  of  the  seal  of  the  Treasury,  and  shall  bear  such  other  statements  and 
devices  as  the  Secretary  of  the  Treasury  shall  direct,  and  shall  contain  a 
statement  that  "  This  note  must  be  'surrendered  to  the  Comptroller  of  Finance 
in  exchange  for  a  new  note  of  similar  denomination  during  the  year"  (stat- 
ing the  year  for  retiring  the  same}.  Said  notes,  and  gold  and  silver  coin  of 
ihe  United  States,  shall  be  received  at  par,  in  satisfaction  of  all  obligations 
within  the  jurisdiction  of  the  United  States  for  the  payment  of  money.  Said 
gold  and  silver  coin  and  currency  shall  be  exchangeable  at  the  face  value 
thereof* 

SEC.  5.    And  be  it  further  enacted : 

That  it  shall  be  the  duty  of  the  Comptroller  of  Finance  to  receive  worn- 
out  and  mutilated  circulating  notes  issued  hereunder,  and  with  the  Secre- 
tary of  the  Treasury  the  Comptroller  of  Finance  shall  compare  said  notes 
with  the  duplicates  thereof  on  file,  and  when  satisfied  that  the  same  are  the 
originals  issued  under  this  act,  they  shall  be  destroyed  by  being  burned  to 
ashes  in  the  presence  of  the  Secretary  of  the  Treasury  and  the  Comptroller 
of  Finance  and  such  other  person  as  the  President  shall  designate..  A  per- 
manent book  of  record  of  the  destruction  of  such  notes,  with  sufficient 
descriptions  thereof,  shall  be  kept  by  the  Comptroller  of  Finance  and  pub- 
lished in  the  Bulletin  of  Finance.  Aiter  said  destructions  of  said  notes, 
new  notes  of  the  same  denominations  and  number  shall  be  issued  to  the 
owners  of  the  destroyed  notes,  of  which  duplicates  shall  be  kept  as  herein- 
before provided.  Such  new  notes  shall  be  marked  second  series  or  third 
series  as  the  case  may  be. 

*This  provides  for  the  issue  of  $20  or  any  other  fixed  sum  per  capita  on 
the  census  of  1890,  and  for  an  additional  issue  at  every  census  so  as  to  bring 
the  issue  up  to  the  requirements  of  increased  population  and  business. 

It  also  provides  that  additional  currency  can  be  issued  dollar  for  dollar 
for  gold  or  silver  bullion  held  for  exchange  of  any  currency  notes. 

The  paper  is  much  more  desirable  for  business  use,  while  the  coin  will 
be  held  therefor  in  the  United  States  Treasury  to  exchange  for  any  of  the 
currency  issued. 

The  total  volume  of  coin  and  bullion  in  the  country  is  about  $1,180,239,- 
077.  The  additional  currency  would  be  about  $1,319,760,923.  Total  $2,- 
500,000,000. 

When  the  coin  is  in  the  Treasury  a  proportionate  amount  of  currency 
"would  be  additionally  in  circulation. 

This  issue  would  represent  about  2  cents  on  the  dollar  of  our  National 
wealth  of  some  3,400,000  square  miles  of  the  richest  land  in  the  world, 

which,  with  the  wealth  thereon  represents  about  $71,000,000,000. 

Based  on  the  proposed  constitutional  amendment,  this  would  give  us 
the  safest,  soundest  system  of  finances  any  nation  ever  had  and  would 
make  us  the  banking  nation  of  the  world.  We  now  pay  annually  over 
$60,000,000  interest  and  profits  to  foreign  capital  for  the  use  of  money. 
This  nearly  represents  the  output  of  our  gold  and  silver  mines.  By  issuing 
our  own  full  volume  of  money  we  save  this  $60,000,000  for  the  benefit  of 
our  own  people. 

In  case  of  a  war  or  other  emergency  the  United  States  could  issue  its 
bonds  and  borrow  of  the  people  out  of  the  volume  in  their  hands  instead  of 
"being  forced  to  seek  foreign  money. 


42  NATIONAL  CURRENCY 

SEC.  6.    And  be  it  further  enacted  : 

That  in  the  year  following  each  second  census ',  beginning  with  the  census 
of  1910,  the  entire  issue  of  circulating  notes  shall  be  retired  and  destroyed  as 
provided  in  Section  5  herein.  And  under  the  provisions  of  this  act  a  new  is- 
sue shall  be  made,  from  new  dies  and  plates  and  with  new  designs,  and  shall 
be  substituted  for  the  retired  notes;  and  during  the  year  for  retiring  said 
notes  each  banking  institution,  doing  business  hereunder  shall,  during  the 
months  of  January,  February,  March  and  April,  for  ward  to  the  Comptroller 
of  Finance  at  least  25  per  cent  each  month  of  said  notes  in  its  possession* 
and  in  exchange  therefor  the  Comptroller  of  Finance  shall  issue  the  new 
notes  of  the  same  denomination.  During  the  remaining  months  of  the  year 
each  of  said  banking  institutions  shall  monthly  forward  all  of  the  o!d  issue  of 
notes  it  may  have  or  receive  to  the  Comptroller  of  Finance  for  destruction 
and  exchange.  During  said  remaining  months  of  said  year  for  retiring 
said  old  issue,  any  person  or  corporation  may  forward  notes  of  the  old  issue 
for  destruction  and  exchange  to  the  Comptroller  of  Finance.  After  the  ex- 
piration of  the  said  year  for  the  retiring  said  old  issue  of  notes,  the  said  old 
issue  shall  cease  to  be  lawful  money  of  the  United  States,  and  shall  only  be 
received  by  the  Comptroller  of  Finance  for  destruction  and  e.\  change,  and 
shall  be  so  received  until  the  outstanding  old  issue  is  entirely  retired  and  de- 
stroyed. The  dies  and  plates  used  in  producing  the  old  issue  of  notes  shall 
be  destroyed  by  fusing  in  fire  in  January  of  each  year  of  retiring,  in  the 
presence  of  the  Secretary  of  the  Treasury,  the  Comptroller  of  Finance,  and 
some  person  appointed  by  the  President.  A  record  of  the  destruction  of 
said  plates  shall  be  kept  in  the  office  of  the  Comptroller  of  Finance.* 

SEC.  7.    And  be  it  further  enacted : 

That  for  the  purpose  of  putting  said  notes  in  circulation  the  Comptroller 
of  Finance  shall  be  authorized  to  retire  all  outstanding  notes  or  currency  of 
the  United  States,  and  to  buy  such  legally  issued  bonds  of  the  states,  counties, 
and  incorporated  cities  of  over  5000  inhabitants,  as  he  deems  proper.  Said 
bonds  to  be  issued  by  said  states,  counties  and  cities,  for  a  valuation  not  to 
exceed  five  per  cent  of  the  average  assessed  value  of  the  real  estate  in  said 
state,  county,  or  city,  for  the  five  years  preceding  the  issuance  of  said  bonds, 
deducting  from  the  said  issue  of  bonds  the  par  value  of  any  other  outstand- 
ing bonds  issued  by  said  state,  county  or  city.  Said  bonds  shall  be  a  lien  on 
all  personal  and  real  estate  in  said  state,  county  or  city,  except  public  prop- 
erty, and  shall  bear  interest  at  the  rate  of  two  per  cent  per  year,  and  shall 
not  run  to  exceed  twenty  years.  The  interest  shall  be  payable  annually  to  the 
Comptroller  of  Finance  at  Washington,  and  a  sinking  fund  shall  be  provided 
in  each  case  sufficient  to  liquidate  said  bonds  at  or  before  maturity.  The 
public  issuance  of  such  bonds,  their  delivery  to  the  Comptroller  of  Finance, 
and  the  receipt  of  the  circulating  notes  therefor,  shall  be  deemed  conclusive 
evidence  of  the  legal  issuance  and  validity  of  said  bonds,  and  thereafter  no 


*  Section  6  contains  new  matter  providing  for  a  surrender  and  can- 
cellation, every  twenty  years,  of  the  whole  issue,  and  replacing  the  same 
by  a  new  issue  from  new  plates  and  new  designs.  Counterfeiting  appli- 
ances will  thus  be  rendered  useless,  and  their  issue  rendered  worthless. 
The  currency  notes  lost  or  destroyed  can  be  replaced,  thus  keeping  up  the 
volume. 


NATIONAL  CURRENCY  43 

defense  shall  be  set  up  to  the  payment  of  principal  or  interest,  or  to  the  levy- 
ing and  collecting  of  taxes  therefor.  All  objections  or  defense  to  the  issue 
of  said  bonds  must  be  made  by  the  parties  interested  prior  to  the  delivery 
thereof  to*the  Comptroller  of  Finance,  otherwise  they  are  forever  waived  and 
barred  as  a  defense.  Said  bonds  may  be  sold  by  the  Comptroller,  and  such 
bonds  or  any  United  States  bonds  may  be  deposited  at  par  by  banks,  with  the 
Treasurer  as  reserve  security,  on  which  said  banks  may  obtain  the  use  of 
money  as  hereinafter  provided. 

If  said  state,  county,  or  city  shall  fail  or  neglect  at  any  time  to  levy  and 
collect  a  sufficient  tax  to  meet  the  obligations  of  said  bonds,  there,  shall  be 
immediately  due  and  payable  to  the  Comptroller  of  Finance  a  tax  on  the  real 
and  personal  property  in  said  state,  county,  or  city  in  default,  on  its  last  as- 
sessment roll,  sufficient  to  meet  said  payments  and  costs  of  collecting  the 
same  ;  and  the  same  s  hall  be  collected  by  any  person  or  persons  appointed 
therefor  by  the  Comptroller  of  Finance,  who  shall  have  power,  where  said 
tax  is  not  paid  within  thirty  days  after  it  is  levied,  to  collect  the  same  by  seiz- 
ure and  sale  upon  warrant  issued  by  any  judge  ex  parte  of  any  court  of  or- 
iginal jurisdiction,  state  or  National,  having  jurisdiction  of  the  property. 
The  United  States  may  become  the  purchaser  of  such  property.  Redemption 
may  be  made  within  one  year  after  sale,  by  paying  the  amount  due  on  the 
sale,  costs  and  interest  thereon  at  ten  per  cent.  Provided  that  no  bonds  shall 
be  purchased  hereunder  except  such  as  by  state  laws  are  made  subject  to  the 
terms  of  this  act* 

*This  section  is  entirely  new.  After  the  Government*  has  prepared  for 
issue  the  $1,319,760,923  currency,  what  will  be  done  with  it?  It  cannot  be 
given  away.  This  section  provides  a  method  of  putting  a  part  of  it  in  cir- 
culation for  the  benefit  of  the  people. 

There  would  be  taken  up  all  forms  of  unsecured  paper  money  of  the 
United  States  about— 1534,088,802  ;  leaving  $785,672,121  to  be  put  into  cir- 
culation. 

The  debts  of  states,  cities  and  counties  of  the  United  States  is  about 
$834,847,679. 

Of  this  about  $750,000,000  is  outstanding  bonds  maturing  annually 
through  a  period  of  years.  Under  this  section  these  states,  cities  and 
counties  can  issue  certain  2-per-cent  bonds,  which  can  be  purchased  with 
the  issued  money  of  the  United  States.  These  bonds  can  only  be  fssued 
for  say  5  or  10  per  cent  of  the  averaged  assessed  value  of  the  property  for  the 
preceding  five  years,  deducting  outstanding  bonds.  Under  this  provision 
some  $200,000,000  bonds  of  states,  cities  and  counties  would  be  absorbed 
the  first  year,  still  leaving  $585,672,121  to  be  put  in  circulation  under  Sec- 
tions 8  and  34. 

This  purchase  of  bonds  in  the  discretion  of  the  Comptroller  from  states, 
counties  and  cities  is  equivalent  to  a  direct  2-per-cent  loan  to  the  people  on 
all  their  real  and  personal  property,  including  the  perishable  property  as 
well  as  the  non-perishable  property. 

It  is  much  farther  reaching  in  its  popular  benefits  than  any  Sub-Treasury 
scheme,  and  does  not  require  an  army  of  agents  to  run  it.  It  saves  to  the 
people  about  4  per  cent  per  year  on  all  interest-bearing  bonds  ;  and  will 
eventually  reach  a  loan  of  some  $700,000,000  to  the  people,  and  will  save 
them  annually  about  528,000,000. 

Power  is  given  the  United  States  to  collect  principal  and  interest  in 
case  of  default,  but  no  default  would  occur.  Bonds  may  be  classified  as  to- 
security  as  follows  :  United  States  Bonds,  State  Bonds,  County  Bonds,  City 
Bonds.  These  by  the  laws  are  a  lien  on  all  property  until  paid,  and  are 


44 


NATIONAL  CURRENCY 


SEC.  8.     And  be  it  further  enacted : 

That  associations  for  carrying  on  the  business  of  banking  may  be  formed 
by  any  number  of  persons,  not  less  in  any  case  than  five,  who  shall  enter 
into  articles  of  association,  which  shall  specify  in  general  terms  the^proposed 
name  of  the  association,  the  object  for  which  the  association  is  formed,  and 
the  proposed  capital  stock ;  and  may  contain  any  other  provisions  not 
inconsistent  with  the  provisions  of  this  act,  which  the  association  may  see 
fit  to  adopt  for  the  regulation  of  the  business  of  the  association  and  the 
conduct  of  its  affairs,  which  said  articles  shall  be  signed  by  the  persons 
uniting  to  form  the  association,  and  a  copy  of  them  forwarded  to  the 
Comptroller  of  Finance,  to  be  filed  and  preserved  in  his  office.  Attached 
lo  said  articles  of  association  shall  be  a  schedule  of  the  bonds  or  real  estate 
offered  and  known  as  "  the  reserve  security  "  as  herein  provided  for,  which 
schedule  shall  accurately  describe  said  bonds,  and  real  estate  and  the  improve- 
ments thereon,  stating  in  whom  the  title  is  vested  in  fee  simple  absolute,  free 
of  all  incumbrances  or  liens,  and  giving  the  yearly  assessed  value  of  said 
real  estate  for  each  separate  year  for  state  and  county  purposes  for  the  five 
preceding  years,  which  schedule  shall  be  certified  to  as  correct  by  the  proper 
keeper  of  the  records  of  title  of  said  property.  Upon  receipt  of  said  articles 
and  schedule,  the  Comptroller  of  Finance  shall  proceed  in  whatever  manner 
he  deems  best  to  verify  the  facts  set  out  in  said  schedule;  and  when  satisfied 
that  the  average  assessed  value  for  said  five  years  next  preceding  is  not  in 
excess  of  half  of  the  actual  value  of  said  real  estate,  and  that  the  schedule 
is  otherwise  correct  as  to  its  statement,  he  shall  notify  said  persons  of  that 
fact  of  the  name  approved  by  him  for  the  association. f 


paid  by  taxation  under  this  section.  When  once  sold  their  validity  can 
never  be  questioned. 

They  would  be  readily  purchased  by  banks  and  financiers  everywhere, 
on  account  of  their  safety. 

Below  them  range  the  bonds  of  the  railroads  and  of  other  private  cor- 
porations. 

The  United  States  bonds  will  soon  go  out  of  existence,  and  the  National 
bank  note  issue  will  cease. 

This  section  provides  that  state,  county  and  city  (of  over  5000  or  10,000 
population)  bonds  may  be  purchased  by  the  United  States,  and  resold  to 
banks, ;  to  be  used,  as  United  States  bonds  have  been,  as  a  collateral  security 
on  which  banks  can  draw  money  to  meet  expanding  and  contracting  de- 
mands of  trade.  No  stringency  or  panic  of  the  money  market  could  ever 
occur,  as  the  United  States  would  be  legally  back  of  all  banks  ;  as  it  was 
illegally  back  of  Eastern  banks  in  the  panic  of  1890. 

This  system  will  largely  equalize  money  all  over  the  United  States,  and 
give  a  low  uniform  rate  of  interest  of  3  to  4  per  cent;  and  will  forever  pre- 
vent a  corner  on  money. 

This  system  will  meet  with  the  most  bitter  opposition  from  owners  ot 
money,  foreign  or  domestic,  who  desire  to  keep  the  volume  of  money 
under  their  control.  It  will  meet  with  the  support  of  all  users  of  money, 
and  of  the  laboring  classes.  Shall  the  users  of  money  become  the  slaves 
of  the  owners  of  money? 

Shall  the  owners  of  money  absolutely  dictate  and  control  the  volume 
of  money?  Shall  the  money  be  issued  by  the  authority  of  all  the  people, 
backed  by  the  wealth  of  all  the  people,  and  then  be  turned  over  to  a  few  to 
use  as  an  engine  of  oppression  against  the  masses  who  issued  it? 

f  Under  this  section  National  banks  can  be  formed.     Under  the  old  law, 
only  the  United  States  bonds  could  be  used  to  start  a  National  bank.     As 


NATIONAL   CURRENCY  45 

SEC.  9.    And  be  it  further  enacted : 

That  the  person's  uniting  to  form  such  an  association  shall  make  a  cer- 
tificate of  organization,  which  shall  specify  : 

First—  The  name  assumed  by  the  association. 

Second — The  place  where  its  operations  of  discount  and  deposit  are  to 
be  carried  on,  designating  the  state,  territory  or  district,  and  also  the  par- 
ticular county  and  city,  town  or  village. 

Third — Its  capital  stock,  and  the  number  of  shares  into  which  it  shall 
be  divided. 

Fourth  —  The  names  and  places  of  residence  of  the  shareholders,  and 
the  number  of  shares  held  by  each. 

Fifth  —  An  accurate  copy  or  the  schedule  of  bonds  or  real  estate  attached: 
to  the  articles  of  association  provided  for  in  section  8. 

Sixth  —  A  declaration  that  said  certificate  is  made  to  enable  such  per- 
sons to  avail  themselves  of  the  advantages  of  this  act,  and  that  said  bonds 
and  real  estate  are  for  security  as  required  in  this  act. 

The  said  certificate  shall  be  duly  signed  and  acknowledged  by  each  of 
said  persons,  in  the  manner  required  by  the  law  of  the  place  for  acknowl- 
edging conveyances  of  real  estate,  to  entitle  them  to  be  recorded.  When 
duly  certified  therefor  said  certificate  shall  be  recorded  in  the  proper  book  of 
record  of  the  county  or  district  in  which  the  real  estate  is  situated:  there- 
after no  lien  or  claim  shall  attach  to  any  of  said  real  estate,  except  such  as 

these  bonds  had  been  largely  sold  to  foreign  capitalists,  no  new  National 
banks  could  be  formed  unless  such  new  banks  paid  for  these  bonds  what- 
ever premium  was  asked. 

It  was  a  cold-blooded  corner  on  United  States  bonds.  The  premium  was 
run  so  high  that  people  could  not  afford  to  buy  them  for  banking,  and  this 
gave  a  corner  on  National  banks. 

This  section  8  prevents  all  corners  on  the  banking  system  of  the  people. 

Banks  can  use  certain  bonds  of  states,  counties,  and  cities.  Real  estate, 
on  a  safely  guarded  system,  can  be  used,  and  the  title  be  placed  in  the 
United  States  the  same  as  the  bonds,  and  used  to  the  extent  of  the  aver- 
aged assessed  value  of  the  property  for  the  preceding  five  years.  Under 
this,  banks  could  utilize  their  bank  buildings.  It  would  encourage  every 
bank  to  become  the  owner  of  its  own  building,  and  to  erect  substantial 
structures.  As  it  now  is  most  banks  are  tenants,  not  daring  to  invest  funds 
in  a  building  for  its  business. 

This  would  add  to  the  stability  of  the  banking  business,  and  give  greater 
security  to  the  people.  Under  this  and  sections  9-10-11-12,  the  owners  of 
lands  may  use  them  in  banking,  the  same  as  bonds,  as  collateral  security. 

This  will  enable  farmers  or  other  land  owners  to  incorporate  a  National 
bank,  using  their  land  as  a  basis  for  security  to  the  Government. 

This  is  better  than  the  Sub  -Treasury  plan ;  for  under  this  system  the 
farmers  can  elect  their  own  officers  and  handle  their  own  money  affairs, 
through  the  banking  system.  A  bank  being  incorporated  for  twenty  years, 
could  during  that  time  handle  the  affairs  of  a  farming  community :  without 
the  constant  work  of  new  loans,  under  the  Sub  -Treasury  plan. 

When  the  money  was  not  needed,  at  any  particular  season  or  year,  it 
can  be  returned  to  the  United  States  Treasury,  stopping  interest.  When 
again  required  for  use,  it  is  obtained  from  the  Treasury. 

Individuals  conducting  large  enterprises  in  the  West  and  South,  or  in 
other  places,  can  utilize  their  real  estate,  under  these  banking  privileges, 
to  get  the  use  of  money  for  twenty  years :  thus  enabling  them  to  safely 
carry  to  success  long-time  plans  and  industries. 


46  NATIONAL  CURRENCY 

shall  be  wholly  subordinate  to  the  prior  claim  under  said  certificate  against 
said  real  estate  for  the  purposes  of  this  act.  When  duly  recorded  the  said 
certificate  shall  be  transmitted  to  the  Comptroller  of  Finance,  who  shall  re- 
cord and  carefully  preserve  the  same  in  his  office.  Copies  of  said  certifi- 
cate, duly  certified  by  the  Comptroller  of  Finance  and  authenticated  by  his 
seal  of  office,  shall  be  legal  and  sufficient  evidence  in  all  courts  and  places 
within  the  jurisdiction  of  the  Government  of  the  United  States  of  the  exist- 
ence of  said  association  and  of  every  other  matter  that  could  be  proved  by 
the  production  of  the  original  certificate.* 

SEC.  10.     And  be  it  further  enacted  : 

That  no  association  shall  be  organized  hereunder  with  a  "  reserve  secur- 
ity "  greater  than  one  million  dollars,  or  with  a  less  "  reserve  security  "  than 
twenty-Jive  thousand  dollars,  nor  with  a  capital  stock  of  less  than  fifty  thou- 
sand dollars.^ 

SEC.  ii.     And  be  it  further  enacted  : 

That  whenever  a  certificate  of  organization  has  been  received  and  filed 
by  the  Comptroller  of  Finance,  and  is  found  by  him  to  fully  comply  with 
the  requirements  of  this  act,  the  Comptroller  of  Finance  shall  proceed  to 
investigate,  in  the  manner  deemed  best,  the  personal  standing,  financial 
condition  and  record  of  the  persons  seeking  to  form  the  association,  also 
the  object  of  the  association,  the  location  and  value,  present  and  prospect- 
ive, of  the  real  estate  described  in  said  certificate  of  organization,  and  any 
other  facts  that  may  aid  him  in  determining  the  desirability  cf  such  an  asso- 
ciation and  the  probable  safety  of  its  business  affairs  and  management. 
The  Comptroller  of  Finance  may  use  such  special  means  as  he  deems  best 
to  safely  ascertain  the  facts  above  referred  to.  When  it  shall  appear  to  the 
satisfaction  of  the  Comptroller  of  Finance  that  the  association  is  lawfully 
entitled  to  commence  the  business  of  banking  with  safety  to  the  Government 
and  to  the  people,  he  shall  issue  to  such  association  a  certificate  under  his 
hand  and  official  seal  that  such  association  has  complied  with  all  the  provi- 
sions of  this  act  required  to  be  complied  with,  and  that  such  association  is 
authorized  to  commence  the  business  of  banking,  designating  the  place  of 
business,  fully  naming  the  directors  and  officers  thereof  for  the  first  year  and 
its  capital  stock  and  character  and  amount  of  reserve  security.  The  said  cer- 
tificate shall  be  published  in  such  local  newspapers,  for  sixty  days,  as  the 
Comptroller  of  Finance  shall  designate.  From  the  date  of  said  certificate 
said  association  shall  be  deemed  a  body  corporate  to  transact  the  business 
of  banking  hereunder,  with  the  usual  rights,  powers  and  duties  of  banking 

*SEC.  9.  This  section  provides  for  forming  banks  and  placing  bonds, 
of  states,  counties  and  cities,  and  real  estate,  with  the  United  States  Treas- 
ury as  a  reserve  security  on  which  to  draw  money  when  required. 

fSEC.  10.  There  are  some  six  thousand  banks  that  would  probably 
come  under  this  system.  Their  reserve  security  would  probably  aggregate 
$400,000,000.  But  of  course  this  would  never  be  drawn  on  at  once,  as  all 
localities  would  not  require  it  at  the  same  time.  Probably  not  to  exceed 
$100, 000,000  would  ever  be  in  actual  use  at  any  one  time.  With  such  a  re- 
serve power  back  of  our  banking  system,  a  panic  or  stringency  would  be 
impossible. 


NATIONAL  CURRENCY  47 

•corporations,  and  shall  exist  for  the  period  of  twenty  years.  An  impress 
of  its  corporate  seal  shall  be  filed  with  the  Comptroller  of  Finance  and  with 
the  Secretary  of  the  Treasury. 

SEC.  12.    And  be  it  further  enacted : 

That  thereafter,  upon  the  demand  of  said  association,  the  Comptroller  of 
Finance  shall  issue  to  said  association  a  warrant  on  the  Treasury  of  the 
United  States,  for  circulating  notes  of  the  Government  to  the  amount  of  the 
said  average  assessed  value  of  real  estate,  or  the  par  value  of  said  bonds  de- 
posited by  said  bank,  or  for  any  part  thereof,  as  demanded  from  time  to 
time,  which  warrants,  upon  presentment  duly  endorsed,  shall  be  paid  out  of 
the  Treasury  in  the  notes  issued  hereunder.  Said  sum  or  any  part  thereof, 
may,  on  the  first  of  any  quarter  of  the  year,  be  returned  to  the  Treasury* 

SEC.  13.     And  be  it  further  enacted : 

That  the  affairs  of  all  associations  for  banking  purposes  formed  here- 
under shall  be  managed  by  its  board  of  directors,  which  may  be  in  legal 
session  on  any  Monday  from  10  A.  M.  wherein  a  quorum  is  present,  and  on 
any  other  day  where,  after  notice,  a  quorum  may  be  present,  or  to  which  a 
regular  session  may  be  adjourned,  a  quorum  being  present. 

Every  director  shall  be  a  citizen  of  the  United  States  during  his  whole 
term  of  service ;  and  at  least  three-fourths  of  the  directors  shall  have  re- 
sided in  the  state  or  territory  or  district  in  which  such  association  is  located 
one  year  next  preceding  their  election  or  appointment  as  directors,  and 
shall  be  residents  thereof  during  their  term  of  office.  Each  director  shall 
own  in  his  own  right  at  least  ten  shares  of  the  capital  stock  of  the  association. 
Each  director,  when  elected  or  appointed,  shall  take  an  oath  that  he  will, 
so  far  as  the  duty  devolves  upon  him,  diligently  and  honestly  administer 
the  affairs  of  such  association,  and  will  not  knowingly  violate,  or  willingly 
permit  to  be  violated,  any  of  the  provisions  of  this  act,  and  that  he  is  the 
bona  fide  owner  in  his  own  right  of  ten  shares  of  the  capital  stock  of  the 
association,  standing  in  his  own  name  on  the  books  of  the  association,  and 
that  the  same  is  not  hypothecated  or  in  any  way  pledged  as  security  for  any 
loan,  debt  or  obligation;  which  oath  subscribed  by  him  and  duly  certified, 
as  required  by  law,  shall  be  immediately  transmitted  to  the  Comptroller  of 
Finance  and  by  him  filed  and  preserved  in  his  office. 

SEC.  14.     And  be  it  further  enacted: 

That  the  directors  of  any  association  first  appointed  shall  hold  office 
until  their  successors  shall  be  elected  and  qualified.  All  elections  shall  be 
held  on  the  second  Tuesday  of  January  of  each  year,  and  the  directors  as 
elected  shall  hold  their  places  until  their  successors  are  elected  and  quali- 

*SEC.  12.  Under  this  section,  money  can  be  drawn  from  the  Treasury 
reserve  to  meet  the  demands  of  expanded  trade  at  any  season  of  the  year, 
and  used  as  long  as  needed  and  then  returned;  in  all  cases  paying  one- 
quarter's  interest  at  least.  No  system  can  more  perfectly  or  automatically 
meet  the  expanding  and  contracting  demands  of  trade.  This  gives  full 
and  perfect  elasticity  to  the  currency  supply.  The  unsecured  money  will 
be  lying  idle  in  the  United  States  Treasury,  at  no  cost  to  anyone,  ready  to 
go  at  any  moment  when  needed  to  any  part  of  the  United  States  to  meet  a 
financial  demand. 


48  NATIONAL  CURRENCY 

fied.  Any  vacancy  occuring  by  reason  of  a  director  ceasing  to  own  the 
required  amount  of  stock,  or  from  any  other  cause,  shall  he  filled  by 
appointment  by  the  board.  If  from  any  cause  an  election  shall  not  be  held 
at  the  time  designated,  it  may  be  held  on  any  subsequent  day  by  publishing 
thirty  days'  notice  thereof  in  a  local  daily  paper. 

SEC.  15.    And  be  it  further  enacted : 

That  in  all  meetings  of  the  stockholders  each  share  of  stock  shall  be 
entitled  to  one  vote  on  all  questions.  Shareholders  may  vote  by  proxies > 
duly  authorized  in  writing.  None  but  shareholders  can  use  or  hold  a  proxy. 

SEC.  16.    And  be  it  further  enacted : 

That  the  shares  of  stock  may  be  transferred  on  the  books  of  the  associa- 
tion in  such  manner  as  may  be  prescribed  in  the  by-laws  of  the  association. 
No  transfer  shall  be  made  of  stock  where  the  holder  is  indebted  to  the  as- 
sociation in  any  manner ;  but  the  association  has  a  lien  on  all  of  its  stock 
for  such  indebtedness.  Every  person  becoming  a  shareholder  by  transfer, 
or  otherwise,  shall,  in  .proportion  to  his  shares,  succeed  to  all  the  rights 
and  liabilities  of  the  prior  holder  of  such  shares,  and  no  change  shall  be 
made  in  the  articles  of  association  by  which  the  rights,  remedies  and  se- 
curities of  the  existing  creditors  of  the  association  shall  be  impaired.  The 
shareholders  of  each  association  formed  under  the  provisions  of  this  act, 
and  of  each  exisiting  bank  or  banking  association  that  may  accept  the 
provisions  of  this  act,  shall  be  held  individually  responsible,  equally  and 
ratably,  and  not  one  for  the  other,  for  all  contracts,  debts  and  engagements 
of  such  associations  to  the  extent  of  the  amount  of  their  stock  therein,  at 
par  thereof,  in  addition  to  the  amount  invested  in  such  shares. 

SEC.  17.    And  be  it  further  enacted : 

That  the  capital  stock  or  the  reserve  security  of  any  association  formed 
hereunder  may  be  increased  or  decreased  within  the  limits  fixed  for  the 
capital  stock  or  the  reserve  security  by  this  act  by  a  two-thirds  vote  of  its 
shareholders  at  any  annual  meeting  in  January.  The  increase  or  decrease 
of  capital  stock  or  the  reserve  security  shall  be  made  by  complying  with 
the  requirements  of  this  act  as  to  the  formation  of  such  associations  in  the 
first  instance,  and  by  complying  with  such  additional  requirements  as  the 
Comptroller  of  Finance  may  deem  best  to  secure  the  interests  of  all  parties 
concerned,  provided  that  in  the  decrease  of  the  reserve  security,  the  associ- 
ation so  decreasing  its  reserve  security,  shall  surrender  to  the  Comptroller 
of  Finance  circulating  notes  received  thereon  to  the  amount  of  the  decrease. 
In  such  cases  the  Comptroller  of  Finance  may,  in  his  discretion,  release 
from  the  effect  of  this  act  a  pro  rata  of  the  bonds  or  real  estate  described  in 
the  certificate  of  organization,  but  this  shall  only  be  done  in  cases  where  the 
Comptroller  of  Finance  shall  fond  the  association  to  be  solvent.  The  maxi- 
mum or  minimum  of  such  increase  or  decrease  shall  be  determined  by  the 
Comptroller  of  Finance. 

Any  association  organized  hereunder  may  close  up  its  business  and  dis- 
solve its  organization  by  a  vote  of  its  stockholders  had  at  the  annual  meet- 
ing in  January.  In  such  cases  the  association  must  first  settle  all  of  its 
outstanding  obligations  and  return  to  the  Comptroller  of  Finance  the  circu- 
lating notes  received  on  its  reserve  security.  The  Comptroller  of  Finance, 


NATIONAL  CURRENCY  49 

upon  receipt  of  a  statement  of  the  foregoing  facts  duly  authenticated  by 
the  directors  of  said  association  under  oath,  shall  fully  investigate  the 
matters  pertaining  thereto  ;  and  upon  being  satisfied  that  all  obligations  of 
said  association  are  fully  satisfied  and  discharged,  shall  cause  said  state- 
ment to  be  published  for  at  least  sixty  days  in  a  local  newspaper,  and  shall 
also  cause  a  notice  thereof  to  be  inserted  in  the  United  States  Bulletin  of 
Finance  for  the  same  period.  If  any  objections  to  the  dissolution  are  filed  • 
with  the  Comptroller  of  Finance  before  the  expiration  of  said  sixty  days,  he 
shall  determine  and  adjust  any  matters  therein  objected  to  ;  when  so 
adjusted,  or  if  no  objections  are  filed  with  him,  he  shall  issue  a  certificate 
dissolving  said  association  and  releasing  the  bonds  or  real  estate  described 
in  the  certificate  of  organization  from  any  further  claim  or  demand  thereon. 
Said  certificate  of  dissolution  shall  be  by  him  duly  signed  and  acknowledged 
so  as  to  entitle  the  same  to  record  in  the  office  where  the  certificate  of 
organization  was  recorded.  The  Comptroller  of  Finance  shall  duly  record 
said  certificate  of  dissolution  in  his  office,  and  thereafter  shall  transmit  the 
same  to  said  association  upon  the  same  being  duly  recorded  in  the  office 
where  the  certificate  of  organization  was  recorded.  The  association  will 
thereby  be  completely  dissolved.* 

SEC.  18.    And  be  it  further  enacted : 

That  if  at  any  time  the  value  of  the  real  estate  described  in  the  certificate 
of  organization  shall  depreciate  in  value,  to  be  decided  by  the  Comptroller  of 
Finance,  he  may  require  any  portion  of  the  circulating  notes  of  the  associa- 
tion's reserve  security  to  be  surrendered  to  the  Comptroller  of  Finance,  or  he 
may  require  further  real  estate  security  as  in  the  original  formation  of  the 
association.  Should  the  Comptroller  of  Finance  at  any  time  deem  the 
affairs  of  said  association  unsafe  from  any  cause,  he  may  appoint  a  special 
agent  or  agents  under  his  hand  and  seal  of  office,  who  shall  have  power  to 
inspect  all  affairs  of  said  association  and  to  close  up  its  affairs  to  the  best 
possible  advantage  to  all  parties  interested.  To  this  end  he  shall  have 
power  to  bring  or  defend  any  suit  in  the  name  of  the  association,  and  to 
sell  at  public  or  private  sale  any  or  all  of  the  real  estate  described  in  the 
certificate  of  organization,  and  to  execute  proper  conveyances  thereof, 
and  use  the  proceeds  to  close  up  the  affairs  of  the  association.  He  shall 
also  have  power  to  collect  from  the  stockholders  the  amount  for  which 
they  are  responsible  under  this  act,  and  to  use  the  same  to  close  up  the 
accounts.  He  shall  give  such  bonds  for  faithful  performance  of  his  duties 
hereunder  as  the  Comptroller  of  Finance  may  require.  His  certificate  of 
appointment  shall  be  duly  acknowledged  and  recorded  as  the  other  certifi- 
cates are  required  to  be.  The  Government  shall  be  a  preferred  creditor 
in  all  such  cases  as  are  provided  for  in  this  section.t 

*This  section  provides  that  any  portion  of  a  reserve  security  may  at 
any  time,  at  the  option  of  a  bank,  be  released  from  the  claim  of  the  United 
States  by  surrendering  a  pro  rata  of  any  money  obtained  thereon. 

This  enables  such  property  at  any  time  to  be  used  for  other  purposes. 
The  section  also  provides  for  the  increase  ot  reserve  security  when  re- 
quired. 

fThis  section  protects  the  United  States  against  any  depreciation  in  real 
estate  held  by  it  as  reserve  security.  It  possesses  the  beneficial  elements  of 
a  call  loan  when  securities  depreciate. 


50  NATIONAL  CURRENCY 

SEC.  19.    And  be  it  further  enacted : 

That  the  directors  may  semi-annually  declare  dividends  from  the  net 
profits  of  the  association,  but  such  association  before  it  shall  declare  a  divi- 
dend shall  carry  at  least  ten  per  cent  of  its  net  profits  to  a  reserve  fund 
until  said  reserve  fund  shall  equal  the  capital  stock  of  said  association. 

SEC.  20.    And  be  it  further  enacted : 

That  it  shall  be  lawful  for  any  association  hereunder  to  purchase,  hold 
and  convey  real  estate  as  follows : 

First—  Such  as  shall  be  necessary  for  its  immediate  accommodation  in 
the  transaction  of  its  business  and  for  its  reserve  security. 

Second—  Such  as  shall  be  mortgaged  to  it  in  good  faith  by  way  of  secur- 
ity for  debts  previously  contracted  or  for  loans  made  thereon. 

Third— Such  as  shall  be  conveyed  to  it  in  satisfaction  of  debts  pre- 
viously incurred  in  the  course  of  its  dealings. 

Fourth — Such  as  it  shall  purchase  at  sales  under  judgments,  decrees, 
or  mortgages  held  by  the  association,  or  shall  purchase  to  secure  debts 
due  to  said  association. 

Such  association  shall  not  purchase  or  hold  real  estate  for  any  other 
purpose  than  as  herein  specified.  Provided,  that  all  such  real  estate  ac- 
quired other  than  for  the  purpose  of  the  business  of  the  association  shall 
be  sold  within  five  years  after  it  is  obtained  by  the  association. 

SEC.  21.    And  be  it  further  enacted : 

That  each  association  may  charge  such  rates  of  interest  as  may  be 
allowed  by  local  laws  where  the  association  is  situated.  Each  association 
shall  keep  on  hand  in  cash  an  amount  equal  to  at  least  twenty-five  per  cent 
of  the  amount  of  its  deposits,  when  the  reserve  amount  shall  fall  below 
said  percentage.  No  more  dividends  or  loans  shall  be  made  until  the 
amounts  called  in  shall  restore  the  said  percentage. 

SEC.  22.     And  be  it  further  enacted: 

That  every  association  hereunder  shall  make  to  the  Comptroller  of 
Finance  a  report,  according  to  the  form  which  may  be  prescribed  by  him, 
verified  by  the  oath  or  affirmation  of  the  president  or  cashier  of  such  as- 
sociation, which  report  shall,  among  other  things,  exhibit  in  detail,  and 
under  appropriate  heads,  the  resources  and  liabilities  of  the  association, 
and  the  last  assessment  valuation  of  its  real  estate  before  the  commence- 
ment of  business  on  the  morning  of  the  first  Monday  of  the  months  of 
January,  April,  July  and  October  of  each  year,  and  shall  transmit  the  same 
to  the  Comptroller  of  Finance  within  five  days  thereafter.  And  any  bank 
failing  to  transmit  such  report  shall  be  subject  to  a  penalty  of  one  thousand 
dollars  for  each  day  after  said  five  days  that  said  report  is  delayed  beyond 
that  time.  The  Comptroller  shall  cause  abstracts  of  said  reports  to  be 
published  in  the  United  States  Bulletin  of  Finance,  and  the  separate  report 
of  each  association  shall  be  published  by  the  association  in  a  local  daily 
newspaper  for  at  least  one  week.  Said  association  shall  forward,  with  each 
quarterly  report,  one-half  (}4)  of  one  per  cent  of  the  cash  used  on  its  reserve 
security,  during  the  preceding  quarter,  as  interest  thereon,  on  sums  not  to 
exceed  $50, ooOt  and  three-fourths  of  one  per  cent  per  quarter  on  sums  in  excess 
of  $50,000  and  less  than  $iootooo;  thereafter  the  rate  shall  increase  one  per 


NATIONAL  CURRENCY  51 

cent  per  quarter  additional  on  each  additional  $50,000  used  or  on  any  part 
thereof:  and  in  case  of  default  in  the  payment  thereof,  by  any  association, 
said  interest  may  be  collected  in  the  manner  provided  for  the  collection  of 
United  States  duties  of  other  corporations.  In  addition  to  the  quarterly  re- 
ports required  herein,  every  association  shall,  on  the  first  Tuesday  of  each 
month,  make  to  the  Comptroller  of  Finance  a  statement  under  oath  of  the 
president,  or  the  cashier,  showing  the  condition  of  the  association  making 
such  statement,  in  respect  to  the  average  amount  loans  and  discounts, 
specie  and  circulating  notes  on  hand  belonging  to  the  association,  clearing- 
house certificates,  deposits,  and  such  other  matters  as  the  Comptroller  of 
Finance  may  require.* 

SEC.  23.    And  be  it  further  enacted: 

That  no  association  shall  make  loans  or  discount  on  the  security  of  the 
shares  of  its  own  capital  stock,  nor  be  the  purchaser  or  holder  of  any  such 
shares  unless  such  security  or  purchase  shall  be  necessary  to  prevent  loss 
upon  a  debt  previously  contracted  in  good  faith ;  and  stock  so  purchased 
or  acquired  shall  be  sold  within  six  months  from  the  time  of  its  purchase. 
But  no  such  purchase  or  sale  shall  relieve  the  former  owner  thereof  from 
his  pro  rata  of  responsibility  for  all  debts  incurred  by  the  association  prior 
to  sale  and  transfer  to  a  new  purchaser  in  good  faith. 

SEC.  24.    And  be  it  further  enacted : 

That  no  association,  or  any  member  thereof,  shall,  during  the  time  it 
shall  continue  its  banking  operations,  withdraw,  or  permit  to  be  withdrawn, 
either  in  the  form  of  dividends  or  otherwise,  any  portion  of  its  capital  or 
reserve  fund.  And  if  any  losses  shall  at  any  time  have  been  sustained  by 
any  such  association,  equal  to  or  exceeding  its  undivided  profits  then  on 
hand  in  cash,  no  dividend  shall  be  made;  and  no  dividend  shall  ever  be 
made  by  any  association,  while  it  shall  continue  its  banking  operations,  to 
an  amount  greater  than  its  net  profits  then  on  hand,  deducting  therefrom 
its  losses  and  bad  debts  and  ten  per  cent  for  the  reserve  fund.  And  all 
debts  due  any  association,  on  which  the  interest  is  past  due  and  unpaid  for 
a  period  of  six  months,  unless  the  same  shall  be  well  secured  and  shall  be 
in  process  of  collection,  shall  be  considered  bad  debts  within  the  meaning 
of  this  act. 

*One  great  objection  to  any  increase  of  the  volume  of  money  alleged  is 
that  it  leads  to  the  inflation  of  business. 

Banks  usually  check  this  by  advancing  the  rate  of  interest  to  such  a 
point  that  there  is  no  profit  in  the  speculation. 

The  Bank  of  Germany  is  required  to  pay  to  the  government  5  per  cent 
interest  on  all  paper  money  issued  beyond  a  certain  fixed  sum. 

This  Section  22  is  drawn  to  prevent  the  inflation  of  business.  While 
banks  can  draw  on  their  reserve  with  the  Government,  each  bank  must  pay 
an  increasingly  higher  rate  of  interest  on  each  $50,000  drawn.  This  will 
run  the  interest  up,  on  each  succeeding  $50,000,  to  a  rate  where  it  will  be 
unprofitable  to  use  it.  The  result  will  be,  not  that  business  will  be  killed 
off  and  people  lose  all  of  their  property,  but  that  they  will  retrench  as 
speedily  as  possible. 

The  want  of  this  principle  in  our  finances  caused  a  loss  and  shrinkage 
in  values  of  over  $10,000,000,000  in  1890.  And  then,  to  stop  a  nation's  panic 
and  calamity,  the  United  States  Treasury  came  to  the  relief  of  banks.  The 
above  provides  a  method  for  all  such  emergencies. 


52  NATIONAL  CURRENCY 

SEC.  25.    And  be  it  further  enacted  : 

That  the  president  and  cashier  of  every  such  association  shall  cause  to 
be  kept  at  all  times  a  full  and  correct  list  of  the  names  and  residences  of 
all  the  shareholders  in  the  association,  and  the  number  of  shares  held  by 
each,  in  the  office  where  its  business  is  transacted ;  and  such  list  shall  be 
subject  to  public  inspection  during  business  hours  of  each  day  in  which 
business  may  be  legally  transacted.  A  copy  of  said  list  shall  be  sent  with 
each  quarterly  report  to  the  Comptroller  of  Finance. 

SEC.  26.     And  be  it  further  enacted : 

That  the  directors  of  any  bank  incorporated  under  any  National  or  state 
law  may,  upon  the  authorization  of  the  owners  of  two-thirds  the  capital  stock, 
in  writing,  duly  signed  and  acknowledged,  avail  themselves  of  the  provisions 
of  this  act  and  become  a  National  association  under  their  corporate  name  by 
complying  with  the  provisions  oj  this  act;  the  said  directors  being  by  said 
vote  authorized  to  execute  all  papers  relating  thereto.  Any  matters  not 
herein  provided  for  in  such  cases  shall  be  adjusted  by  the  Comptroller  of 
Finance  in  accordance  with  the  spirit  and  intention  of  this  act.* 

SEC.  27.     And  be  it  further  enacted : 

That  all  associations  under  this  act,  when  designated  for  that  purpose 
by  the  Secretary  of  the  Treasury,  shall  be  depositaries  of  public  money,  ex- 
cept receipts  from  customs,  under  such  regulations  as  may  be  prescribed 
by  the  Secretary ;  and  they  may  also  be  employed  as  financial  agents  of 
the  Government ;  and  they  shall  pepform  all  such  reasonable  duties,  as  de- 
positaries of  public  moneys  and  financial  agents  of  the  Government,  as 
may  be  required  of  them.  And  the  Secretary  of  the  Treasury  shall  require 
of  the  association  thus  designated,  satisfactory  security  for  the  safe  keeping 
and  prompt  payment  of  public  funds  deposited  with  them,  and  for  the  faith- 
ful performance  of  their  duties  as  financial  agents  of  the  Government. 

SEC.  28.     And  be  it  further  enacted : 

That  all  transfers  of  the  assets  or  any  part  thereof,  of  any  association 
doing  business  hereunder,  made  after  the  commission  of  an  act  of  insolv- 
ency, or  in  contemplation  thereof,  with  a  view  to  prevent  the  application 
of  it  as  assets  in  the  manner  prescribed  in  this  act,  or  with  a  view,  to  the 
preference  of  one  creditor  to  another,  shall  be  utterly  null  and  void. 

SEC.  29.     And  be  it  further  enacted : 

That  any  director,  officer  or  employ^,  of  any  association  organized 
hereunder,  who  shall  knowingly  violate,  or  permit  any  of  such  persons  to 
violate  the  provisions  of  this  act,  shall  be  removed  forthwith  from  his  posi- 
tion, by  the  proper  authority  of  the  association,  or  by  order  of  the  Comp- 
troller of  Finance.  And  any  director,  officer  or  employ^  of  such  associa- 
tion who  shall  so  transact  the  business  of  such  association,  or  any  part  of 
it,  as  to  intentionally  defraud  the  association  or  any  one  else,  or  with  the 
intention  to  deceive  or  mislead  any  officer  of  the  association,  or  any  agent 
appointed  to  examine  the  affairs  of  such  association,  shall  be  deemed  guilty 
of  a  misdemeanor,  and  upon  conviction  thereof  shall  be  punished  by  im- 
prisonment for  not  more  than  ten  years. 

*  This  section  provides  a  way  whereby  state  banks  or  private  banks  caa 
re-incorporate  under  the  National  system. 


NATIONAL  CURRENCY  53 

SBC.  30.    And  be  it  further  enacted  : 

That  all  suits  and  proceedings  arising  out  of  the  provisions  of  this  act, 
in  which  the  United  States  or  its  agents  or  officers  shall  be  parties,  shall  be 
conducted  by  the  district  attorneys  of  the  several  districts,  under  the  direc- 
tion and  supervision  of  the  Solicitor  of  the  Treasury.  And  that  all  suits  or 
actions  arising  under  the  provisions  of  this  act,  may  be  had  in  any  circuit, 
district  or  territorial  court  of  the  United  States  held  within  the  district  in 
which  the  association  may  be  established,  or  in  any  state,  county  or  mu- 
nicipal court  in  the  jurisdiction  of  which  said  association  is  established, 
which  has  jurisdiction  in  similar  cases. 

SEC.  31.    And  be  it  further  enacted : 

That  if  any  person  shall  falsely  make,  forge  or  counterfeit,  or  cause  or 
procure  to  be  made,  forged  or  counterfeited,  or  willingly  aids  or  assists  in 
forging  or  counterfeiting  any  note  in  imitation  of,  or  purporting  to  be  in 
imitation  of  the  circulating  notes  issued  under  the  provision  of  this  act, 
or  shall  pass,  utter  or  publish,  or  attempt  to  pass,  utter  or  publish,  any 
false,  forged  or  counterfeited  note  purporting  to  be  issued  under  the  pro- 
visions of  this  act,  knowing  the  same  to  be  falsely  made,  forged  or  counter- 
feited, or  shall  falsely  alter,  or  cause  or  procure  to  be  falsely  altered,  or 
willingly  aids  or  assists  in  falsely  altering  any  such  circulating  notes  issued 
under  the  provisions  of  this  act,  or  shall  pass,  utter  or  publish,  or  attempt 
to  pass  utter  or  publish  as  true,  any  falsely  altered  or  spurious  circulating 
notes  issued,  or  purporting  to  have  been  issued  under  the  provisions  of 
this  act,  knowing  the  same  to  be  falsely  altered  or  spurious,  every  such 
person  shall  be  deemed  and  adjudged  guilty  of  a  felony,  and  being  thereof 
convicted  shall  be  sentenced  to  be  imprisoned  and  kept  at  hard  labor  for 
a  period  of  not  less  than  five  years  nor  more  than  twenty  years,  and  fined 
in  a  sum  not  exceeding  one  thousand  dollars. 

SEC.  32.    And  be  it  further  enacted : 

That  if  any  person  shall  make  or  engrave,  or  cause  or  procure  to  be 
made  or  engraved,  or  shall  have  in  his  custody  or  possession  any  plate,  die 
or  block  after  the  similitude  of  any  plate,  die  or  block  from  which  any  cir- 
culating notes  issued  as  aforesaid  shall  have  been  prepared  or  printed,  with 
intent  to  use  such  plate,  die  or  block,  or  cause  or  suffer  the  same  to  be 
used  in  forging  or  counterfeiting  any  of  the  notes  issued  as  aforesaid,  or 
shall  have  in  his  custody  or.  possession  any  blank  note  or  notes  engraved 
and  printed  after  the  similitude  of  any  notes  issued  as  aforesaid  with  intent 
to  use  such  blanks,  or  cause  or  suffer  the  same  to  be  used  in  forging  or 
counterfeiting  any  of  the  notes  issued  as  aforesaid,  or  shall  have  in  his 
custody  or  possession  any  paper  adapted  to  the  making  of  such  notes,  and 
similar  to  the  paper  upon  which  any  such  notes  shall  have  been  issued, 
with  intent  to  use  such  paper,  or  cause  or  suffer  the  same  to  be  used  in 
forging  or  counterfeiting  any  of  the  notes  issued  as  aforesaid,  every  such 
person,  being  thereof  convicted  by  due  course  of  law,  shall  be  sentenced 
to  be  imprisoned  and  kept  at  hard  labor  for  a  term  not  less  than  five  or 
more  than  twenty  years,  and  fined  in  a  sum  not  exceeding  one  thousand 
doUacs. 


54 


NATIONAL  CURRENCY 


SEC.  33.     And  be  it  further  enacted: 

That  the  Comptroller  of  Finance  shall  cause  to  be  prepared  each  month 
concise  information  showing  the  amount  of  circulating  notes  issued  during 
the  preceding  month,  and  the  approximate  amount  df  circulating  notes,  gold 
and  silver  coin,  in  each  state,  territory,  district,  and  in  the  principal  cities  of 
the  United  Stales,  and  also  the  amotmt  in  the  various  vaults  or  Treasuries  of 
the  United  States.  Also  the  amounts  expended  by  the  Government  in  each 
state,  territory  or  district.  It  shall  also  contain  the  name  of  each  bank,  the 
amount  of  its  capital  stock,  its  reserve  fund,  and  its  losses  for  the  preceding 
month,  and  such  other  information  as  shall  be  deemed  of  sufficient  value  to 
the  financial  interest  of  the  people  to  be  published.  Such  information  shall 
be  published  monthly  by  the  Department  of  Printing  in  pamphlet  form,  of 
convenient  size  for  permanent  binding  in  book  form.  One  copy  of  each  issue 
shall  be  sent  monthly  to  each  of  the  following  parties :  To  each  association 
doing  business  heretmder,  to  the  President  and  each  member  of  his  Cabinet, 
to  each  member  of  Congress,  and  to  such  other  officers  of  the  Government  as 
the  Comptroller  of  Finance  may  direct.  Also  to  the  Governor  of  each  state, 
territory  or  district,  and  to  each  public  library,  itniversity  or  college  applying 
therefor.  Any  person  may  have  a  copy  forwarded  to  his  address  for  one 
year  by  first  forwarding  to  the  Comptroller  of  Finance  the  sum  of  one  dollar* 

SEC.  34.    And  be  it  further  enacted: 

That  as  the  currency  notes  shall  accumulate  in  the  Treasury  of  the 
Government  from  revenue  or  otherwise,  they  shall  be  returned  to  circulation 
among  the  people,  in  addition  to  the  ways  hereinbefore  specified,  by  paying 
the  current  expenses  of  the  Government;  by  the  purchase  of  suitable 
grounds  and  the  erection  of  suitable  buildings  for  post  offices  and  other  uses 
of  the  Government ;  by  the  construction  of  such  other  works  as  shall  be 
deemed  by  Congress  for  the  best  interests  of  the  public.  The  expenditures 
shall  be  made  annually,  in  each  state,  territory  or  district  as  nearly  as  may  be 
in  proportion  to  the  number  of  Us  inhabitants  ;  provided,  that  stales  already 
supplied  with  public  buildings  shall  not  receive  additional  expenditures  until 
the  other  states,  territories  or  districts  shall  have  had  their  equal  proportions. 
All  public  work  shall  be  done  by  day^s  labor,  at  the  rale  of  one  dollar  and 
fifty  cents  per  day  for  eight  hours  work  for  common  labor.  A  less  rate 
shall  be  paid  where  the  laborer  is  not  able  to  perform  a  reasonable  day's 
work.  The  expenditures  hereunder  shall  be  as  directed  from  time  to  time 
by  Congress. ,f 


*This  is  a  new  and  very  important  section.  It  provides  for  the  monthly 
publication  of  a  "Bulletin  of  Finance,"  containing  information  showing 
the  monthly  issue  of  currency  ;  showing  as  nearly  as  may  be  the  volume  of 
gold,  silver  and  currency  in  each  state  or  territory ;  also  showing  the  ex- 
penditures of  the  Government  in  each ,  also  showing  the  essential  facts 
relating  to  the  condition  of  each  bank.  It  also  provides  for  the  proper 
distribution  of  these  Bulletins. 

The  object  of  this  is  to  complete  the  efficiency  of  the  money  system  of 
the  United  States,  and  furnish  to  the  people  correct  knowledge  on  current 
finances.  It  furnishes  the  foundation  knowledge  on  which  to  properly 
execute  Section  34. 

^Section  34  is  of  very  great  importance.  It  is  declarative  of  a  policy.  Our 
Nation  t^day  has  no  organized  method  for  redistributing  the  money  that 


.       NATIONAL  CURRENCY  55 

SEC.  35.    And  be  it  further  enacted  : 

That  all  notes  issued  hereunder  and  all  moneys  received  by  the  Comp- 
troller of  Finance  hereunder  shall  be  deposited  in  the  Treasury  of  the 
United  States.  And  the  Comptroller  of  Finance  shall  keep  an  itemized 
account  of  the  sources  from  which  received,  with  the  dates  thereof. 

accumulates  in  the  United  States  Treasury  from  revenue  and  taxes.  At 
times  vast  sums  are  stored,  to  the  detriment  of  business :  and  the  cry  is 
raised,  "  What  shall  we  do  with  the  surplus  ?  " 

This  section  provides  that,  in  addition  to  the  ways  provided  in  Section 
7,  this  money  shall  be  spent  for  the  usual  expenses  of  the  Government ; 
and  that  the  Government  shall  purchase  suitable  grounds  and  erect  thereon 
suitable  buildings  for  post  offices  and  other  public  uses,  and  that  the  ex- 
penditure shall  be  made  annually  in  each  state  or  territory  in  proportion  to 
its  population.  Under  this  system,  National  public  improvements,  such  as 
on  the  Mississippi  River  or  Nicaragua  Canal,  or  for  irrigation,  may  be 
carried  out. 

As  our  laws  now  are,  it  is  very  difficult  to  get  any  Government  buildings 
erected  except  in  certain  political  localities.  The  money  is  drawn  from  the 
people  in  every  part  of  the  country,  and  should  be  reexpended  proportion- 
ately among  them,  as  it  came  from  them.  It  is  not  a  charity  for  the 
Government  to  spend  money  in  a  community.  That  is  where  it  should  be 
spent.  Every  city  and  village  should  have  a  respectable  and  commodious 
post-office  building,  erected  and  owned  by  the  Government. 

This  section  further  provides  that  this  public  work  shall  be  done  by  day's 
labor,  at  say  $1.50  per  day  for  common  labor.  The  object  is  this  :  first-class 
laborers  always  command  higher  wages  from  private  capital,  and  the  next 
grade  of  labor  is  left  unemployed.  It  is  in  this  class  that  the  suffering 
mostly  occurs.  If  the  people  of  the  United  States  in  public  work  give 
employment  to  this  class  of  people,  they  will  be  aiding  citizens  who  should 
receive  the  care  of  the  stronger. 

Such  laborers  cannot,  for  various  reasons,  perform  as  much  work  per 
day  as  the  best  laborers.  Public  buildings  would  cost  just  as  much,  or  even 
more,  by  employing  this  class  than  by  employing  the  best  class  :  but  the 
object  of  any  government  should  not  be  to  get  the  cheapest  results  in  a 
specific  case,  it  should  be  for  the  general  good.  This  class  of  laborers  must 
Irve.  If  labor  is  not  furnished,  they  must  beg  or  steal.  In  either  of  these 
cases  the  public  must  bear  the  expense.  It  is  far  better  to  keep  up  the  tone 
of  respectability  among  our  people,  by  furnishing  employment  and  paying 
what  the  work  is  worth.  Thus,  instead  of  the  laboring  class  feeling  that 
an  ever-widening  gap  existed  between  them  and  the  form  of  government, 
they  would  feel  it  to  be  their  friend  and  would  be  interested  in  maintaining 
its  existence. 

Educated,  and  with  high  aspirations,  our  people  should  receive  better 
wages  and  a  preference  in  employment. 

If  we  wish  to  maintain  our  standard  of  civilization,  we  must  pay  for  it 
and  help  our  educated  laborers  to  a  higher  plane  of  life.  They  should  not 
be  forced  into  competition  with  laborers  emerging  from  a  low  civilization, 
in  foreign  nations. 

And  here,  in  protection  of  our  own  laborers,  would  it  not  be  well  for  our 
Government  to  close  its  doors  to  the  inflooding  of  foreign  labor? 

Why  should  we  pay  foreigners  for  labor  and  let  our  own  citizens  go  idle? 

It  is  a  noted  fact  that  where  colonies  of  foreigners  get  control  of  local 
labor,  the  American  laborer  finds  it  too  hot  for  him  to  remain. 

We  should  be  generous,  but  we  should  not  be  so  generous  that  we  give 
our  employment  to  strangers  and  drive  our  own  sons  and  daughters  of 
America  into  idleness,  shame  and  want.  If  our  legislative  halls  are 
dominated  by  such  a  foreign  sentiment,  it  is  time  that  they  should  be 


5*  NATIONAL  CURRENCY     , 

SEC.  36.    And  be  it  further  enacted : 

That  all  improvements  on  property  described  in  the  certificate  of  organ- 
ization shall  be  kept  insured  by  the  association  to  the  full  amount  of  its 
assessed  value,  payable  to  the  Comptroller  of  Finance  ;  and  all  insurances  on 
such  property ,  in  whatever  name  insured,  shall,  in  case  of  loss,  be  paid  by  the 
insurance  company  to  the  Comptroller  of  Finance,  to  be  by  him  disposed  of, 
with  the  consent  of  the  Secretary  of  the  Treasury,  as  they  may  deem  best  in 
the  interest  of  the  various  parties  concerned* 

SEC.  37.     And  be  it  further  enacted  : 

That  it  shall  be  unlawful  for  any  officer  acting  under  the  provisions  of 
this  act  to  countersign  or  deliver  to  any  association,  or  to  any  other  com- 
pany or  person,  any  circulating  notes  contemplated  by  this  act,  except  as 
herein  provided,  and  in  accordance  with  the  true  intent  and  meaning  of 
this  act.  And  any  officer  who  shall  violate  the  provisions  of  this  section 
shall  be  deemed  guilty  of  a  high  misdemeanor,  and  on  conviction  thereof 
shall  be  punished  by  a  fine  not  exceeding  double  the  amount  so  counter- 
signed and  delivered,  and  imprisoned  for  not  less  than  one  year  and  for 
not  exceeding  fifteen  years. 

SEC.  38.    And  be  it  further  enacted : 

That  if  the  directors  of  any  association  shall  knowingly  violate,  or 
knowingly  permit  any  of  the  officers,  agents  or  servants  of  the  association 
to  violate  any  of  the  provisions  of  this  act,  all  the  rights,  privileges  and 
franchises  of  the  association  derived  from  this  act  shall  be  thereby  forfeited. 
Such  violation  shall  be  first  determined  and  adjudged  by  a  proper  circuit, 
district,  or  territorial  court  of  the  United  States,  in  a  suit  brought  for  that 

cleared  of  the  un-American  element,  and  men  representing  the  American 
idea  sent  to  make  our  laws. 

The  redistribution  of  wealth  is  one  of  the  fundamental  problems  of  the 
human  race,  to  be  solved  by  each  nation.  The  Israelites  attempted  it  by 
Years  of  Jubilee,  when  debtors  were  discharged  and  heirs  were  restored  to 
the  real  property  of  their  ancestors. 

Every  human  being  is  entitled  to  live,  and  self-preservation  is  an  inaliena- 
ble right,  lying  at  the  foundation  of  every  government. 

The  non-property-owners  own  their  ability  to  labor,  and  out  of  it  are 
entitled  to  obtain  the  necessaries  of  the  civilization  in  which  they  live, 
to-wit :  food,  clothing,  shelter,  education. 

The  best  interests  of  property-owners  require  that  there  should  be  no 
degraded,  ignorant  classes.  If  they  are  not  allowed  to  live  by  their  labor, 
they  are  entitled  to  live  by  robbery  or  begging. 

Prosecution  to  prevent  this  eventually  results  in  anarchy,  as  shown  by 
history  of  past  nations. 

It  therefore  becomes  the  duty  of  a  government,  by  a  wise  system  of 
taxation,  to  collect  money  from  the  owners  of  property,  and  use  in  in  em- 
ploying the  labor  of  non-property-owners  to  produce  benefits  for  the  com- 
mon good. 

By  pursuing  such  a  policy  as  this,  our  citizens  would  come  to  regard 
our  Government  as  a  common  benefactor ;  and  as  a  matter  of  individual 
protection  would  stand  solid  against  foreign  or  domestic  danger. 

It  is  with  this  view  before  me  that  Section  34  is  proposed  for  the  par- 
tial redistribution  of  wealth. 

*Section  36  provides  for  the  insurance  of  buildings  or  property  used  in  the 
proposed  banking  system. 


NATIONAL  CURRENCY  57 

purpose  in  the  name  of  the  Comptroller  of  Finance,  which  decree  shall 
adjudge  the  association  dissolved.  Thereupon  the  affairs  of  the  associa- 
tion shall  be  closed  up  by  the  Comptroller  of  Finance ;  and  in  case  of  such 
violation,  every  director  who  participated  in  or  assented  to  the  same  shall 
be  held  liable  in  his  personal  and  individual  capacity  for  all  damages  which 
the  association,  its  shareholders,  or  any  other  person  shall  have  sustained 
in  consequence  of  such  violation.  Such  directors  shall  thereafter  be  dis- 
qualified for  the  office  of  director  in  any  association  formed  hereunder ; 
and  any  president,  director,  cashier,  teller,  clerk  or  agent  of  any  associa- 
tion who  shall  embezzle,  abstract  or  wilfully  misapply  any  of  the  moneys, 
funds  or  credits  of  the  association,  or  shall,  without  authority  from  the 
directors,  issue  or  put  forth  any  certificate  of  deposit,  draw  any  order  or 
bill  of  exchange,  make  any  acceptance,  assign  any  note,  bond  or  draft,  bill 
of  exchange,  mortgage,  judgment  or  decree,  or  shall  make  any  false  entry 
in  any  book,  report  or  statement  of  the  association,  with  intent  in  either 
case  to  injure  or  defraud  the  association,  or  any  other  company,  body 
politic  or  corporate,  or  any  individual  person,  or  to  deceive  any  officer  of 
the  association,  or  any  agent  appointed  to  examine  the  affairs  of  any  such 
association,  shall  be  deemed  guilty  of  a  misdemeanor,  and  upon  con- 
viction thereof  shall  be  punished  by  imprisonment  not  less  than  one  and 
not  more  than  ten  years. 

SEC.  39.     And  be  it  further  enacted  : 

That  the  Comptroller  of  Finance,  with  the  approbation  of  the  Secretary 
of  the  Treasury,  as  often  as  it  shall  be  deemed  necessary  or  proper,  shall 
appoint  a  suitable  person  or  persons  to  make  an  examination  of  the  affairs 
of  every  banking  association  formed  hereunder ;  which  person  or  persons 
shall  not  be  a  director  or  other  officer  or  employ^  in  any  association  whose 
affairs  he  shall  be  appointed  to  examine,  and  who  shall  have  power  to 
make  a  thorough  examination  into  all  the  affairs  of  the  association,  and,  in 
doing  so,  to  examine  any  of  the  officers  and  agents  thereof  on  oath,  and 
shall  make  a  full  detailed  report  of  the  condition  of  the  association  to  the 
Comptroller.  And  the  association  shall  not  be  subject  to  any  other  visit- 
orial  powers  than  such  as  are  authorized  by  this  act,  except  such  as  are 
vested  in  the  several  courts  of  law  and  chancery.  And  every  person 
appointed  to  make  such  examination  shall  receive  for  his  services  at  the 
rate  of  five  dollars  for  each  day  employed  by  him  in  such  examination,  and 
two  dollars  for  each  twenty-five  miles  he  shall  necessarily  travel  in  the  per- 
formance of  his  duty. 

SEC.  40.    And  be  it  further  enacted : 

That  persons  holding  stock  as  executors,  guardians,  administrators  or 
trustees  shall  not  be  personally  subject  to  any  liabilities  as  stockholders, 
but  the  estates  and  funds  in  their  hands  shall  be  liable  in  like  manner  and 
to  the  same  extent  as  the  testator,  intestate,  ward,  or  person  interested  in 
said  trust  funds  would  be  if  they  were  respectively  living  and  competent  t® 
act  and  hold  the  stock  in  their  own  names. 


NATIONAL  CURRENCY 

SEC.  41.     And  be  it  further  enacted  : 

That  hereafter  no  National  associations  for  the  purpose  of  banking  shall 
be  formed  except  wider  the  provisions  of  this  act,  and  all  banking  institti- 
tions  now  under  the  provisions  of  prior  acts  of  Congress  shall  be  allowed  to 
continue  under  such  acts  until  their  proper  term  of  existence  has  expired* 

SEC.  42.    And  be  it  further  enacted : 

That  the  present  Comptroller  of  Currency  shall  hereafter  be  known  as 
the  Comptroller  of  Finance,  under  this  act,  and  under  such  name  shall,  with 
the  Bureau  now  established,  perform  all  duties  required  under  the  various 
acts  of  Congress  relating  to  currency  or  a  circulating  medium. 

SEC.  43.     And  be  it  further  enacted  : 

That  all  acts  or  parts  of  an  act  in  conflict  with  the  provisions  of  this  act 
are  hereby  repealed,  and  Congress  may  at  any  time  amend,  alter  or  repeal 
this  act. 

*  Under  Section  41,  banks  can  be  formed  under  this  law.  State  or  pri- 
vate banks  can  be  formed  as  usual  under  state  laws,  but  of  course  cannot 
get  the  benefit  of  this  act. 

NEW  SECTION. —  The  currency  issued  under  the  provisions  of  this  act 
shall  be  deemed  a  public  use,  and  shall  not  be  subject  to  taxation  in  the  hands 
of  citizens  of  the  United  States ;  but  gold  or  silver  coin  or  bullion  shall  be 
subject  to  taxation  at  its  market  or  commercial  bullion  value '.f 

fTfeis  section  I  have  not  formally  made  a  part  of  the  proposed  law,  but 
submit  it  for  consideration. 

Its  direct  object  is  to  drive  gold  and  silver  into  the  United  States  Treas- 
ury to  avoid  taxation,  causing  currency  to  be  issued  therefor  (see  Sec- 
tion 6),  thereby  keeping  an  unusually  large  supply  of  those  metals  in  the 
Treasury  for  any  required  demand. 

Usually  money  escapes  taxation,  and  practically  the  public  gets  no  re- 
turn benefit.  Under  this  section  gold  and  silver  will  be  deposited  in  the 
United  States  Treasury,  and  currency  taken  out  therefor. 

In  this  way,  while  the  currency  is  not  taxed,  a  public  benefit  will  arise 
from  its  exemption.  In  return,  money  will  loan  for  a  proportionately  lower 
rate  of  interest.  This  will  again  give  a  proportionately  lower  price,  on  all 
ajrticles  consumed,  to  the  consumer,  and  in  these  respects  directly  compen- 
sate all  paying  taxes  on  other  property. 

In  conclusion,  let  me  say  that  the  people  should  demand  only  such  a 
money  system  as  will  do  justice  and  equity  to  all  the  people  and  all  classes. 
While  you  complain  of  being  overreached,  you  must  not  in  return  over- 
reach or  do  injustice  to  others.  I  would  impress  upon  you  that  all  schemes 
for  a  National  system  of  finances,  that  are  based  on  the  idea  of  giving  a 
class  of  persons  or  banks  power  to  issue  or  control  the  issue  of  money,  are 
dangerous,  and  sooner  or  later  will  be  abused. 

Demand  a  constitutional  amendment,  and  a  law  that  issues  the  money 
by  authority  of  the  people,  backed  by  the  pledged  wealth  of  the  whole  Nation, 
and  circulated  for  the  benefit  of  all,  with  no  special  privilege  for  any  class, 
and  in  volume  sufficient  to  fully  transact  the  business  of  our  growing  country. 


Press  and  Other  Comments. 


"  We  advise  our  readers  to  look  out  for  this  pamphlet. 

"The  views  on  the  currency  question  are  novel,  the  reasoning  taking,  and  the  disregard  for 
many  old  iinancial  doctrines  is  refreshing1  in  these  davs  of  hackneyed  reiteration  of  stock  argu- 
ment's on  the  currency  question." — RliodeJ  Banking  'Journal,  New  Tork* 

"  Judge  Widney's  revised  treatise  on  the  present,  aspect  of  banking  and  currency  in  this 

iniitry,   especially  the 


country,  especially  the  latter,  is  able,  laborious  and  patriotic.  A  California  clearing  house 
should  print  and  circulate  this  treatise  f — *^~  -f^.,*,,,.^  o*  i-^o*-  <.„„,!,;,. v.  ,,r^  *.<>t^  •» — *?„«,•/ 
McNaJly's  Bankers'  Monthly,  Chicago. 


"Judge  Widney  has  just  completed  anew  treatise  on  a  'National  Money  System.'  It  is 
the  most  concise,  exhaustive  and  unanswerable  argument  on  the  money  question  yet  produced. 
The  Alliances  all  over  the  Nation  should  supply  their  members  with  copies,  and  learn  all 
they  can  on  this  subject.  If  the  Alliances  would' drop  all  other  issues  and  adopt  a  National 
platform,  with  no  other  plank  or  issue  than  "Widnsy's  proposed  constitutional  amendment  and 
act  of  Congress,  they  would  carry  the  next  presidential  campaign  by  the  largest  majority  ever 
known  in  historv." — The  Rural  California  n. 

"  It  is  the  clearest  and  most  concise  dissertation  on  the  currency  question  we  ever  listened 
to." — The  Norman  Advocate. 

"  Your  pamphlet,  '  Good  as  Gold,'  '  ;it  good  in  Texas  and  throughout  the  South 

in  educating  our  people  on  the  true  .situation.'' 

ra  Trulv,  HAKVEY  TRACY, 

Editor  Southern  Mercury,  Dallas,  Texas. 

"  Resolved—  That  the  La  Crescenta.  Farmers  Alliance  and  Industrial  Union  do  hereby  most 
gratefully  acknowledge  the  labors  of  R.  M.  Widney,  LL.D  ,  in  the  great  cause  of  financial  re- 
form. 

"J.  IT.  SHIELDS,  President. 
"WILL  S.  FAWCETT,  Secretary." 

"THE  HISTORY  COMPANY, 

SAN  FRANCISCO,  February  14,  1891. 
'•  MY  DEAR  JUDGE: 

I  took  your  pamphlet  home  with  me  last  night  and  read  it  carefully.  I  was  greatly  pleased 
;ind  instructed.  No  one  can  read  this  work  without  being  convinced  that  the  principles  therein 
set  forth  are  in  the  main  souhd  and  sensible.  It  ought  to  be  the  means  of  revolutionizing  the 
question.  With  kind  regards,  etc., 

"  H.  H.  BANCROFT." 

The  Los  Angeles  Bar  Association,  on  the  report  of  the  Committee,  J.  A.  Anderson,  Sam- 
uel Minor  and  S.  O.  Houghton,  unanimously  adopted  the  following  resolutions: 

WHEREAS,  under  the  decision  of  the  Supreme  Court  of  the  United  States  (notably  Hepburn 
vs.  Griswold,  S  "Wall,  608,  and  Knox  vs.  Lee,  12  Wall,  457,)  the  power  of  Congress  in  relation 
to -legal-tender  currency  and  in  relation  to  standard  of  value  seems  to  be  almost  absolute  and 
unlimited  ;  and  whereas,  such  a  power  vested  in  a  legislative  body  will  at  all  times  be  liable 
to  abuse  and  may,  under  political  and  party  excitement,  lead  to  dangerous  contraction  and  in- 
flation of  currency  and  hurtful  changes  in  the  standard  of  values;  therefore  be  it 

Resolved — First,  that  the  welfare  of  the  people  demands  that  the  Constitution  of  the  United 
States  shall  be  so  amended  as  to  define  wit  i  precision  the  power  of  Congress  in  relation  to 
legal-tender  currency  and  in  relation  to  the  standard  of  value. 

Resolved — Second,  that  while  we  do  not  think  it  advisable  to  express  an  opinion  as  to  the 
exact  nature  or  wording  of  the  needed  amendment,  yet  we  deem  it  well  to  call  attention  to  the 
following  proposed  amendment  in  relation  to  the  matter,  prepared  and  proposed  by  our  fellow- 
citizen,  Judge  R.  M.  Widney,  to-wit: 

[See  p.  32  for  Amendment.] 

Resolved — Third,  that  copies  of  these  resolutions  be  sent  to  the  members  of  Congress  from 
California. 

Los  ANGELES,  December  12*  1891, 


ADDRESS 


By   R.    JVE.   WIDNEY,    LL.D., 

PRESIDENT  OF  THE  UNIVERSITY  BANK  OF  Los  ANGELES,  CAL., 

BEFORE   THE 

AMERICAN    BANKERS'    ASSOCIATION, 

In    SAN     FRANCISCO,    September  8,  1892. 


UBJECT:    "VOLUME    OF   MONEY—  WHAT    IS    MONEY—  STATE    BANK 
NOTES—  A  PROPOSED  PLAN." 


fr.  President  a)id  Gentlemen  of  the. 

Does  the  volume  of  money  have  any  influence  whatever  on  the  trade,  commerce, 
usiness  or  prosperity  of  a  nation  or  of  a  people  ? 

Can  there  be  too  much  money?  Can  there  be  too  little  money  ?  Can  there  be  a 
olume  of  money  used  in  the  business  of  a  people  that  would  be  neither  too  much  nor 
oo  little  ?  Each  of  these  questions  will  at  once  be  answered  by  a  yes  or  a  no. 

What  evidence  will  establish  the  facts  of  too  much,  or  too  little,  or  the  exact  volume  ? 
'an  nothing  better  be  offered  in  evidence  and  in  answer  than  the  random  guess  of 
assing  thoughts  or  fleeting  opinions  ?  Are  there  no  laws  governing  these  subjects  ? 

Baron  Von  Humboldt  elaborately  and  logically  demonstrated  that  there  was  no 
hance  in  the  universe.  That  all  things  material  and  immaterial  were  governed  by 
xed,  unalterable,  inexorable  laws.  In  this  all  men  of  science  now  agree. 

There  are  therefore  laws  in  finance,  both  as  to  the  volume  and  the  method  of  using 
loney,  according  to  which  the  best  results  can  be  obtained,  and  violating  which  damage 
ml  failure  must  inevitably  result. 

These  matters  you  already  know,  and  I  only  refer  to  them  as  a  starting  point  and 
)  refresh  your  memories  on  principles  underlying  this  discussion. 

One  more  preliminary  thought.  At  no  time  in  the  history  of  the  race  has  this 
loney  question  so  imperatively  forced  itself  upon  the  people  and  demanded  a  careful 
onsideration  and  wise  and  just  solution.  IT  MUST  BE  SOLVED.  IT  WILL  FORCE  A 

OLUTION.      IT  WILL  NEVER  AGAIN  REST  UNTIL  IT  IS  SOLVED   ON    PRINCIPLES  OF 
USTICE  AND  EQUITY,  AND  IN  THE  INTERESTS  OF  THE  MASSES  OF   THE  PEOPLE. 

The  conflict  is  irrepressible,  and  the  common  intelligence  will  accept  no  solution 
lat  does  not  work  out  the  prosperity  of  the  masses. 

VOLUME   OF   MONEY. 

The  first  question  is,  WHAT  is  THE  VOLUME  in  the  world,  in  the  civilized  nations,  in 
le  United  States  and  in  each  State  ?  The  following  brief  statistics  compiled  from 
ic  most  reliable  financial  reports  are  submitted  for  your  consideration: 

COIN    AND    BULLION   IN   THE   WORLD. 

old  ..........................  ......  $3,984,256,589     Per  capita  ........   $3-22 

ilver  ................................     4,512,754,655       -         ••      ........     3.65 

Total  ..........................  $8,497,011,244       "         "      ........  $6.87 

The  annual  average  product  for  eight  years,  1881  to  1888,  was  : 
old  ..........  4  ......................      $108,376,258     Per  capita  ........   $0.08 

ilver  .................................        121,389,242       "         "     .........  09 

Total   .........     ..............      $229,655,500       "         "     ........   $0.17 


The  annual  consumption  in  the  arts  for  the  world  is  about : 

Gold $64,000,000     Per  capita $0.05 

Silver 21,660,000       "         "     ....  .02 


Total $85,660,000       "         "     $o .  07 

This  leaves  in  gold  and  silver  only  $144,005,506,  or  10  cents  per  capita  to  be  added 
annually  to  the  world's  working  coin  capital. 

The  six  leading  nations  have  in  gold  and  silver  coin  and  bullion  as  follows 

England $650,000,000     Per  capita $i 8 . oo 

France  i  ,600,000,000 

Germany 645,000,000 

Russia 250,000,000 

Italy 200,000,000 

United  States 1,180,240,177 


4300 

14  oo 

12.50 

6.00 

19.00 

Total $4,525,240,177     Average $18.75 

This  leaves  about  $2  per  capita  for  all  other  nations. 

The-above  six  nations  have  over  $18  per  capita  of  the  world's  gold  and  silver.  All 
other  nations  only  $2  per  capita.  As  the  other  nations  awaken  to  the  civilization  and 
business  activity  of  the  nineteenth  and  twentieth  centuries,  they  must  and  will  draw 
more  and  more  coin  from  the  six  nations.  This  is  now  occurring.  South  America, 
India,  China  and  Egypt  are  constantly  absorbing  more  and  more  of  the  coin.  India 
alone  in  recent  years  has  taken  over  a  billion.  They  are  drawing  it  from  the  six 
nations  that  have  so  vastly  more  than  their  proportion.  The  annual  addition  of  10 
cents  per  capita  does  not  even  keep  pace  with  the  increase  of  population. 

Financiers  to  whom  the  money  interests  of  the  nation  are  confided  should  weigh 
well  the  import  of  these  international  facts  and  act  before  it  is  too  late.  Can  you  3top 
the  operation  of  this  law  of  the  outflow  of  coin  ?  No.  Then  what  will  you  do  to  re- 
place your  home  volume  ? 

IN  THE  UNITED  STATES  WE  HAVE  THE  FOLLOWING  FACTS  : 

Gold $694,869,680     Per  capita $11.00 

Silver 485,370,497       "        "     8.00 


Total $1,180,240,177  "  "  $19.00 

The  annual  product  in  the  United  States  is : 

Gold $32,976,000  "  "  

Silver 64,768,730  "  "  


Total $97.735^730  .......     $i .  56 

Industrial  purposes  use : 

Gold $16,697,000 

Silver , 8,767,000 


Total $25,464,000 

The  amount  remaining  for  coinage  of  both  gold  and  silver  is  about  $72,271,730,  or 
per  capita  $1.10. 

As  shown  by  these  statistics,  Europe  is  furnishing  coin  to  the  uncivilized  nations 
that  are  springing  up  into  commercial  activity. 

As  her  millions  of  emigrants  and  speculators  and  business  men  go  to  these  new 
countries,  they  take  their  personal  money  with  them.  They,  before  leaving  their  native 
land,  sell  all  of  their  property,  take  it  in  coin  and  settle  in  their  new  homes.  Can  you 
or  any  one  stop  this  outflow,  this  personal  exportation  of  coin  ?  Europe,  in  turn,  buys 
our  gold — buys  it  as  she  buys  corn,  wheat  or  cotton  ;  buys  it  and  exports  it  to  refill  her 
depleting  vaults.  We  are  as  helpless  to  stop  this  outflow  as  Europe  is  to  stop  the 
outflow  from  her.  When  New  England  is  drawn  down  too  closely  on  the  coin  supply., 
she  will  export  a  $20,000,000  in  gold  from  San  Francisco  to  protect  it  from  "  the 


dangers  of  an  exposed  sea-coast  city"  transfer  it  to  Washington,  get  tired,  and  unload 
it  in  New  York  sub-treasury  subject  to  "the  dangers  of  a  sea-coast  city"  where  money 
was  already  proclaimed  to  be  a  glut  on  the  market. 

Brave  California  saw  the  money  go  without  even  a  financial  tremor.  Had  $20,- 
000,000  in  gold  gone  from  New  York,  at  one  shipload,  would  there-  have  been  no 
unsteadiness  of  her  financial  nerves  ? 

But  what  does  all  this  demonstrate?  Simply  that  the  coin  of  the  world  is  being 
redistributed  among  the  people  of  the  earth  under  the  operation  of  a  law  that  no 
combination  can  control. 

If  there  is  enough  money  in  the  world,  why  do  these  nations  draw  it  away  from  us  ? 
If  we  have  more  than  enough,  why  do  we  struggle  to  keep  it  ? 

The  following  table,  compiled  from  the  report  of  the  Comptroller  of  Currency  of 
October  31,  1891,  throws  a  flood  of  light  on  the  volume  of  money  in  the  various  States 
available  for  new  business  : 

ACTUAL  WORKING   CASH 
In  the  Banks  of  the  United  States  Available  for  Commercial  Use. 

On  pages  154-5,  Report  of  the  Comptroller  of  Currency  for  1891,  Vol.  I.,  are  the  National 
Bank  statistics,  showing  the  legal  amount  of  cash  reserve  required  by  law,  also  showing  the 
amount  of  cash  held  as  a  reserve.  I  subtract  from  the  actual  cash  held  the  cash  required  by 
law,  as  shown  in  the  first  two  columns  of  page  155: 

Total  held $296,850,683 

"     required 216,899,737 

Working  cash  in  United  States $79,950,946 

or  $1.23  per  capita. 

In  addition  to  the  above,  the  banks  held  certain  credits  against  each  other,  and  a  small 
amount  of  credit  against  the  United  States  Treasury.  But  the  credits  of  banks  against  each 
other  do  not  increase  the  cash  volume  of  the  banks;  for  if  the  credits  should  be  extinguished 
by  cash  payments,  it  would  only  shift  the  cash  from  one  to  another. 

Banks  hold  about  $15,720,000  claims  against  the  United  States  Treasury,  as  shown  on  page 
155:  but  they  owe  to  the  United  States  Treasury  about  the  same  amount.  Hence,  when  the 
whole  credits  and  debits  are  extinguished,  it  will  leave  the  cash  as  I  have  shown  above. 

On  page  241  of  the  same  report  is  the  cash  status  of  all  State  Banks  besides  National.     See 
middle  column: 
Total  cash  and  cash  items $107,453,889 

But  cash  items  are  not  real  money.     Bankers  all  know  that  cash  items  are 
only  first-class  demand  credits  which,  when  paid,  remove  cash  from  some  other 
place. 
Deduct  cash  items 51,668,218 

Actual  cash  in  State  Banks $55,785,671 

Page  241  shows  the  deposits  in  these  State  Banks  to  be 556,637,012 

The  lowest  National  Bank  reserve  allowed  is  15  per  cent,  on  deposits.     Deduct 

this  amount  from  the  cash  above 83,495,551 

Deficit $28, 709,880 


From  this  it  will  be  seen  that  the  State  Banks,  including  Savings  Banks,  are  over  $28,000,- 
ooo  below  a  15  per  cent,  reserve,  and  have  no  real  cash  working  capital.  But,  as  a  matter  of 
fact,  Savings  Banks  have  not  over  I  or  2  per  cent,  reserve,  which  would  bring  the  State  Banks 
of  deposits  up  to  a  safe  condition;  but  could  not  leave  a  working  capital  of  over  $10,000,000 
cash,  actual  money.  They  alone  are  not  limited  to  any  reserve,  and  are  postponing  financial 
calamity  by  straining  their  draw  on  cash  to  its  utmost  limits. 

From  these  statistics  it  appears  that — 

National  Banks  have  a  working  cash  fund  of $79,950,946 

State  Banks  have  a  working  cash  fund  of 10,000,000 

Total $89,950,964 

or  about  $1.40  per  capita. 

In  the  hands  of  the  people  is  an  unknown  amount  in  actual  circulation.  Whatever  the 
sum  is,  it  must  be  regarded  as  the  people's  pocket  reserve  for  daily  use.  It  is  not  available 
for  commercial  use. 

The  following  table  computed  from  pages  1^5  and  234  of  the  Comptroller's   Report  for 


Per  capita. 

$0  90 

48 

72 

I    26 

i  39 

1  85 

2  88 

1  41 

2  59 
i 


1891,  Vol.  i,  shows  the  total  volume  of  actual  available  working  cash  in  the  National  Banks 
each  State,  and  the  same  expressed  per  capita.     The  State  Banks  would  add  probably  10  per 
cent,  to  each  item  : 

State.  Total  working  cash. 

Maine $597,825 

New  Hampshire 181,966 

Vermont 249,089 

Massachusetts 2,900, 776 

Rhode  Island 489, 123 

Connecticut 1,412,367 

New  York 17,273,355 

New  Jersey 2,090, 125 

Pennsylvania 13,949,243 

Delaware 245,041 

Maryland 2,274.615 

District  of  Columbia 1,318,045 

Virginia 1,008,421 

West  Virginia 425,448 

North  Carolina 361,231 

South  Carolina 143, 1 77 

Georgia 675, 186 

Florida 198,825 

Alabama , 465,850 

Mississippi 190,832 

Louisiana 675,015 

Texas 3,480,415 

Arkansas 1 18,538 

Kentucky 887,828 

Tennessee 1,025,279 

Ohio 5, 1 18,543 

Indiana 3,791,328 

Illinois 10,620,653 

Michigan ,067,294 

Wisconsin ,329,120 

Iowa ,  347,695 

Minnesota ,5°5,723 

Missouri 81 1, 1 18 

Kansas ,435>962 

Nebraska ,608,594 

Colorado ,918.449                    4  35 

Nevada 2,055                        46 

California 2,146,310                     I  43 

Oregon 934,259                    2  80 

Arizona 35>934                       59 

North  Dakota 224,355                     I   16 

South  Dakota 271,297                         79 

Idaho 136,825                    i  68 

Montana 662,400                    4  56 

New  Mexico 1 16,284                        74 

Indian  Territory. 563,055                     3  10 

Oklahoma. 1,194,301                   10  38 

Utah 120,617                        51 

Washington 27,358                       08 

Wyoming I3?943                        25 

The  foregoing  statistics  show  conclusively  the  insufficient  money  supply  and  its  unequal 
distribution  in  the  States.  Do  they  not  portend  further  financial  calamity  if  not  relieved  by 
appropriate  legislation  ? 

From  these  statistics  furnished  from  the  sworn  statements  of  our  National  Banks 
it  appears  that  the  total  money  available  for  new  business  in  the  National  Banks  of 
the  United  States  is  only  $79,950,946,  or  $1.23  per  capita,  while  a  liberal  estimate  for 
State  Banks  in  addition  would  only  increase  it  to  $1.40  per  capita.  The  distribution 

of  this  surplus  is  as  low  as  10,  12,  14,  21,  22,  30,  and  up  to  60  cents  per  capita  in  the 
Southern  States.  In  the  Western  States  it  runs  from  8  to  76  cents.  The  middle  West- 
ern States  average  about  $1.50;  the  New  England  States  about  $1.75. 

Where   is   the  great  volume   of  four  or  five   hundred  millions    that    does   not 


10 

43 

58 
i  38 

1  71 

2  72 

5? 
76 

69 
I    IO 

29 

99 

i  40 


appear  to  be  caught  by  the  gatherer  of  statistics  ?  It  is  probably  scattered  in  the 
pockets  of  our  people,  over  the  farming  areas,  in  store  tills,  and  in  business  offices  of 
various  kinds.  But  why  not  count  it  in  the  available  working  cash  of  the  country  ? 
The  answer  is  yes  and  no.  Yes,  for  it  fills  a  place  that  if  vacant  would  absorb  from 
other  sources.  It  is  like  the  fills  in  grading  a  road-bed.  A  vast  amount  of  material 
must  be  used  to  fill  up  the  road  to  reach  a  uniform  line.  But  such  material  cannot  be 
removed  and  used  some  other  place.  It  must  permanently  remain  there,  apparently 
useless  except  only  to  fill  a  hole.  So  this  vast  volume  in  the  pockets  and  tills  of  the 
people  must  ever  remain  there  as  a  pocket  reserve.  If  any  part  is  drawn  out  and 
placed  in  bank,  it  immediately  returns  to  fill  a  hole.  This  sum,  therefore,  cannot  ever 
be  used  in  developing  new  industries  or  in  opening  up  and  sustaining  new  business. 
Its  volume  will  increase  as  population  increases,  and  any  safe  money  system  must 
count  on  this  as  a  permanent  fact.  It  must  so  fix  the  volume  as  to  provide  a  working 
cash  capital  perpetually  above  the  pocket  reserve. 

The  reserve  money  in  the  National  Treasury,  in  banks  and  in  the  pockets  of  the 
people  is  and  always  must  remain  dead  money.  It  is  held  to  meet  imaginary 
demands  or  runs.  It  is  held  to  inspire  confidence. 

Let  me  present  you  a  picture,  in  figures,  of  the  money  situation  in  the  United 
States,  gold,  silver  and  paper,  July  I,  1891.  (See  Treasury  Report,  p.  cxl.) 

Total  stock 82,195,224,075     Per  capita..: $34.31 

This  is  the  delusive  phlethora  of  money  spoken  of.     Look  again. 

This  money  is  located  as  follows: 

U.  S.  Treasury $697,783,368 

In  circulation 1,497,440,707     Per  capita 823.41 


Purported  amount $2,195,224,075        "       '•'      $34.41 

Of  the  money  in  the  U.  S.  Treasury  the  following  amounts  are  duplicates  : 

That  is,  the  gold  and  silver  certificates  represent  gold  and  silver  held  for  their 

redemption,  and  either  they  or  the  gold  and  silver  should  not  be  counted,  for  only  one 

can  be  used  as  money. 

The  case  stands  as  follows  : 

Gold  certificates $151,486,429 

Silver 314,715,185 

Total  duplicate $467,201,614 

Taking  the  reported  general  stock  and  deducting  the  above,  we  have  : 

Reported  general  stcck $2,195,224,075 

Duplicate 467,201,614 

Actual  general  stock $1,628,022,461     Per  capita $25.04 

Deducting  this  duplicate  stock  from  the  total  amount  in  the  U.  S.  Treasury,  we  have  : 

Apparent  stock,  U.  S.  Treasury $697,783,368 

Duplicate  stock 467,201,614 

Actual  money  in  U.  S.  Treasury. .      $230,581,754 

But  from  this  amount  must  be  deducted  certain  sums  specially  held  to  redeem  or 
cancel  other  paper  money,  as  follows : 

To  redeem  greenbacks $100,000,000 

This  leaves  the  U.  S.  Treasury  powerless  to  aid  new  business  with  money. 

Let  us  now  examine  the  purported  amount  in  circulation,  and  see  what  amount  is 
tied  up  in  reserves.     October  31,  1891. 

National  Bank  reserves $216,899,737 

State  Bank  reserves 83,495,551 


Total  reserves $300,394,288 

Deduct  from  this  general  circulation 1,497,440,707     Per  capita $23.04 

300,394,288       "        "      4.07 


Total $1,197,046,419       "        "       $18.71 


6 

This  volume  must  suffer  another  reduction  before  we  reach  the  legitimate  amount 
available  for  actual  business  with  which  to  develop  the  new  business  of  the  country. 

The  Treasury  reports  can  find  in  the  entire  banking  system  of  the  United  States 
only  the  following  amounts  of  money  out  of  the  amount  published  as  in  circulation  : 

July  i,  1891. 

National  Banks $3i345i>5°7 

State  and  other  Banks 165,634,081 


Total $479,085,588 

Deducting  this  from  amount  reported  in  circulation, 
we  have 

$1,497,440,707     Per  capita $23.41 

479,085,558 7.50 

Balance $1,018,355,119     Per  capita    $13.91 

The  whereabouts  of  this  balance  is  unknown.  It  includes  an  unknown  amount  of 
lost  or  destroyed  money,  unrecorded  exported  money  by  travelers,  etc.,  and  the  pocket 
and  store  reserves  in  the  country.  It  is  not  available  for  any  new  business. 

The  known  amount,  as  shown  in  all  of  the  Banks  in  the  United  States,  is  : 

$479,085,588     Per  capita $7 .  50 

Of  this  there  is  tied  up  in  reserves 300,394,288     .  "         "     4.70 

This  leaves  a  working  cash  capital  of. 178,691,300       "         "     2.80 

This  is  the  most  favorable  possible  result  shown  by  the  statistics  for  July  I,  1891. 

The  statistics  for  October  31,  1891,  show  only  half  of  the  last  results,  or  $1.40  per 
capita,  and  is  worked  out  from  the  detailed  report  of  the  Banks,  and  is  more  'nearly  cor- 
rect. 

From  this  it  appears  that  the  figures,  upon  which  we  must  do  our  banking  busi- 
ness, show  from  $1.40  to  $2.80  per  capita  as  the  working  cash  capital  for  new  or  cur- 
rent business. 

The  Treasury  report  of  $34.31  per  capita  of  general  stock,  or  of  $23.41  per  capita 
in  circulation,  while  true  as  a  Treasury  balance  sheet,  which  alone  it  is,  cannot  be  used 
as  a  basis  for  estimating  the  working  money  capital  of  this  nation.  With  this  vivid 
picture  in  our  minds  as  to  the  actual  volume  of  money  in  the  business  world,  its  dis- 
tribution and  the  amount  available  for  active  business  and  held  as  reserves,  lost,  de- 
stroyed, exported  and  tied  up  in  pocket  and  till  reserves,  let  us  next  examine  the 
business  activity  which  calls  this  money  into  use. 

The  volume  of  business  in  the  United  States  is  vastly  above  $170,000,000,000  an- 
nually. Our  total  volume  of  money  represents  only  six  mills  on  the  dollar  for  actual 
business.  But  if  you  take  the  actual  volume  of  money  available  for  business,  it  will 
represent  such  a  small  fraction  of  a  cent  that  we  cease  to  wonder  at  the  impossibility 
of  moving  the  volume  of  trade,  and  only  wonder  that  business  is  not  totally  paralyzed. 

As  bankers,  you  understand  that  the  actual  volume  of  money  holds  the  same  rela- 
tion to  the  volume  of  business  that  the  cash  reserve  of  a  bank  holds  to  its  deposits. 

There  can  be  no  permanent  prosperity  until  our  volume  of  available  money  is  in- 
creased. Increasing  disasters  are  abundantly  stored  in  the  future  on  the  present 
relation  between  the  volume  of  money  and  business. 

You  might  as  well  try  to  run  the  railroad  business  of  the  United  States  with  a  few 
hundred  cars. 

When  you  look  over  the  commercial  growth  of  the  world,  the  clanger  is  more  ap- 
parent. South  America,  India,  Africa,  Asia  and  other  minor  communities,  which  have 
been  in  a  commercial  sleep  for  ages,  are  suddenly  awaking  to  activity  and  life. 

They  have  heretofore  had  about  $2  per  capita  in  money  for  business.  Now  they 
will  draw  immense  volumes  from  the  money  stock  of  the  more  advanced  nations. 
Nothing  can  stop  it.  India,  in  recent  years,  has  absorbed  over  $1,000,000,000  of  coin 
money,  a  volume  which  has  not  even  filled  the  pocket  and  till  reserves  of  that  nation. 
China  is  absorbing  hundreds  of  millions,  and  its  presence  among  its  vast  population  is 
hardly  detected. 

The  redistribution  of  the  world's  coin  money  has  hardly  commenced,  and  the 
nations  having  more  than  their  per  capita  must  surrender  more  and  more  until  some- 


what  of  an  equilibrium  is  reached.  While  this  international  disturbance  is  occurring 
there  is  a  similar  one  occurring  in  the  United  States. 

The  South  and  West  are  developing  with  phenomenal  vigor  and  rapidity.  They 
are  absorbing  vast  amounts  of  material  and  money.  They  must  draw  on  the  money 
volume  of  the  other  States.  The  result  of  this  will  be  to  check  up  the  industries  of  the 
New  England  States  and  transfer  them,  or  the  funds  used  in  them,  to  other  new  locali- 
ties West  and  South. 

Various  methods  have  been  suggested  to  furnish  a  money  supply.  The  one  now 
attracting  most  attention  is  the  old  State  Bank  note  system.  The  very  name  suggests 
to  those  who  have  had  experience  with  it  financial  chills  and  fever. 

STATE    BANK   NOTES. 

The  financial  fallacy  of  State  Bank  notes  need  not  be  one  of  opinion.  It  can  be  too 
clearly  and  forcibly  shown  up  by  facts  and  figures. 

The  general  error  is  this  : 

Each  dollar  of  State  Bank  notes  deposited  in  a  bank  creates  a  debt  from  the  bank 
payable  only  in  legal  tender.  In  this  way  the  legal  tender  debt  of  banks  grows,  but 
the  volume  of  legal  tender  in  the  vaults  of  the  banks  does  not  increase.  Business  pros- 
pers on  this  increased  volume  of  credit  money,  deposits  increase;  but  when  a  panic 
comes  and  depositors  call  for  legal  tender,  the  supply  is  quickly  used  up  and  bank 
suspensions  result. 

In  the  panic  of  1838  the  Treasury  report  shows  the  following  statistics,  of  money 
in  circulation: 

State  Bank  notes $149,185,800 

Specie 27,031,476 


Excess  of  State  Bank  notes $122,1 54,324 

The  specie  was  the  only  legal  tender.  The  Government  had  on  October  I,  1836, 
$49,000,000  on  deposit  in  thirty-six  different  State  Banks. 

President  Jackson  ordered  it  withdrawn  and  stored  in  United  States  vaults.  The 
demand  for  withdrawal  of  $49,000,000  legal  tender  from  the  banks  when  there  was 
only  $27,031,476  in  circulation  at  once  swamped  the  banks,  leaving  a  run  on  the  banks 
to  redeem  their  notes  of  over  $149,185,800.  All  banks  in  the  United  States  suspended. 
Solvency  or  security  back  of  a  note  was  not  what  depositors  wanted.  They  wanted  a 
legal  tender  payment. 

Had  the  State  Bank  notes  been  greenbacks  in  1838,  the  statement  would  have  been  : 

Legal  tender  United  States  notes $149,185,800 

Specie 27,031,467 


Total  legal  tender '. $176,217,267 

The  withdrawal  of  the  United  States  deposits  of  $49,000,000  would  have  left  in 
banks  $127,217,267  legal  tender  to  pay  depositors.  No  suspensions  could  thus  have 
occurred.  This  was  the  great  crash  and  panic  of  1838. 

PANIC  OF  1857. 

The  State  Banks  opened  again  and  gradually  expanded  their  note  issue.  The  re- 
depositing  of  their  notes  as  money  in  banks  resulted  in* the  following  condition  in  1857: 

Deposits $i  20,764,757 

Circulating  notes 83,31 2,269 


Total  liability $204, 1 7.7,020 

Special  legal  tender 12,970,493 

Excess  of  liability $191,206,527 

The  loans  and  discounts  were  $320,252,890;  deduct  the  liabilities  and  the  solvency 
represented  $129,046,363  over  and  above  liabilities.  Notwithstanding  this  showing, 
the  Ohio  Life  and  Trust  Company  failed  for  $7,000,000.  But  the  New  York  banks 
began  to  hedge  and  called  in  $57,000,000  loans  between  August  22d  and  October  i7th, 
resulting  in  a  crisis  of  failures  and  a  general  panic.  The  banks  of  Philadelphia,  of 


8 

the  South  and  West,  suspended  September  I3th.     A  run  at   once  was  made  on  tl 
New  York  banks  to  redeem  their  circulation,  followed  by  a  run  on  deposits,  causing 
the  suspension  of  fifty  banks  in  two  days.     The  suspension  became  general   in  tl 
whole  country.     So  much  for  wild-cat  State  Banking,  whether  operated  in  the  South, 
or  West,  or  in  New  York,  or  New  England.     Had  the  State  Bank  issue  been  a  legal 
tender,  issued  by  the  United  States,  no  general  failures  could  have  occurred  in  1857. 
The  conditions  of  the  banks  would  have  been : 

Legal  tender  United  States  notes $83,41 2,269 

Specie 12,970,493 

Total $96,382,762  ] 

Deposits 1 20,764,757  j 

Loans  and  discounts 320,252,890  >  P 

This  is  a  better  showing  than  our  National  Banks  have  made  since  their  formation  j 
and  no  panic  would  have  occurred. 

Again,  the  State  Banks  started  up  using  the  Co-operative  plan.     In  Ohio  thirty-six 
banks  pooled  their  financial  ability;  the  same  was  largely  done  in  other  parts  of  the  1 
country. 

PANIC  OF  1861. 

In  1861  the  war  was  in  the  country.  The  Government  obtained  a  loan  of  $150,- 
000,000  from  sale  of  bonds  from  the  banks  of  the  country.  It  was  drawn  out  by  the 
Treasury  for  payment  of  war  expenses,  but  it  resulted  in  a  general  suspension  of  the 
banks. 

The  financial  statement  of  the  country  was  : 

Specie  in  banks,  about $100,000,000 

State  Bank  notes 202,005,767 

The  Government  draw  of  $100,000,000  in  gold  exhausted  all  the  legal  tender  in  the 
country,  leaving  nothing  with  which  to  redeem  the  State  Bank  notes.  A  collapse  re- 
sulted. Had  National  legal-tender  notes  been  used  in  place  of  the  State  Bank  notes 
the  result  would  be : 

Specie  $100,000,000 

U.  S.  legal  tender 202,005,767 

Total 302,005,767 

The  draw  of  $150,000.000  would  not  have  in  this  case  closed  the  banks  of  the 
Nation.  As  it  was,  the  State  Bank  notes  were  not  a  legal  tender,  and  were  of  no 
more  money  value  than  cords  of  wood  or  tons  of  wheat. 

PANIC  OF  1890. 

In  1890  there  were  no  State  Bank  notes  in  circulation,  and  all  the  money  in  the 
banks  was  backed  by  the  authority  and  wealth  of  the  Nation.  AH  money  was  National 
money,  yet  the  enormous  straining  of  1890,  and  the  heavy  draw  of  gold,  failed  to  cause 
a  suspension  of  the  banks. 

Suppose  that  the  National  Bank  notes  of  $181,604,937  had  in  1890  been  State  Bank 
notes,  a  run  on  the  banks  would  have  occurred,  resulting  in  a  general  suspension. 

No  run  could  occur  on  the  note  circulation,  because  the  resources  of  the  Nation 
were  responsible  to  pay  the  issue. 

No  system  of  State  Bank  circulation  can  have  back  of  it  more  than  a  small  part  of 
the  whole  wealth  of  this  Nation.  The  Canadian  Bank  issue  has  less  than  ten  ($10) 
dollars  assets  back  of  each  one  of  issue.  Our  greenbacks  have  over  $200  in  assets 
back  of  each  dollar  issued. 

No  State  Bank  issue  can  become  a  legal  tender ;  it  never  can  be  used  in  a  crisis  to 
extinguish  debts.  It  is  then  the  greatest  element  of  weakness  and  danger. 

The  foregoing  brief  review  of  the  finances  of  the  United  States  show  a  series  of 
efforts  for  over  one-half  a  century,  which,  referring  back  to  Colonial  times,  would 
include  nearly  two  centuries,  to  give  to  society  a  money-circulating  medium. 

It  demonstrates  beyond  all  question  the  great  and  constant  effort  of  society  to 
supply  itself  with  money.  It  demonstrates  that  society  is  constantly  outgrowing  its 
supply,  and  has  been  periodically  suffering  from  financial  panic.  In  a  few  words  it 


emonstrates  that  either  our  circulating  medium  must  be  increased  to  meet  the 
"rowing  wants  of  our  growing  country,  or  the  business  of  the  country  must  be 
periodically  killed  off  until  it  is  within  the  compass  of  our  circulation. 

Society  is  constantly  trying  to  supply  this  money  demand.  Will  that  which  is  not 
noney  meet  the  wants  ?  No  ;  for  if  it  will,  then  we  do  not  need  money. 

This  brings  us  to  consider  the  question  :  What  is  money? 

Unless  we  clearly  know  what  money  is,  we  can  not  successfully  make  it.  Erro- 
eous  ideas  at  this  critical  point  result  not  in  producing  money,  but  an  erroneous  sub- 
titute  for  it,  which  when  used  in  the  commercial  world  sooner  or  later  breaks  down 
society's  injury. 

I  know  of  no  definition  of  money  that  includes  all  that  should  be  included,  and 
xcludes  all  that  should  be  excluded.  I  submit  the  following  as  a  correct  definition  of 
loney : 

Money  is  that  article  in  a  Nation  with  which  a  debtor  can  extinguish  his  debt, 
without  the  consent  of  the  creditor,  at  a  fixed  unit  of  value.  In  other  words,  a  legal 
snder  by  the  supreme  law  of  the  land.  As  a  corollary  of  this,  good  money  is  that 
loney  which  will  be  accepted  readily  by  each  person  in  exchange  at  its  face  value, 
-very  man  wishes  to  know  that  any  other  person  will  receive  the  money  at  the  same 
alue  at  which  he  received  it. 

To  illustrate.  You  owe  a  man  one  hundred  ($100)  dollars.  You  tender  him  a 
undred-dollar  gold  bar,  standard  fineness ;  he  refuses  it.  You  offer  him  ten  such 
ars  ;  he  refuses.  You  cannot  force  it  on  him.  The  fiat  of  the  Nation  is  not  on  the 
ars.  You  melt  it  into  disks,  stamped,  and  of  the  standard  weight  of  twenty  ($20) 
ollar  gold  pieces.  You  tender  these ;  he  rejects  them,  and  sends  you  to  the  peniten- 
iary  for  counterfeiting.  The  fiat  of  the  Nation  was  a  forgery.  You  tender  him 
English  sovereigns,  gold  francs,  or  marks  with  the  fiat  of  a  foreign  nation  on  them; 
e  refuses  them.  The  debt  is  not  extinguished,  for  the  foreign  fiat  is  null  and  void  in 
lis  land  for  want  of  jurisdiction,  and  they  are  not  money ;  only  bullion.  Now  you 
snder  him  fifty  ($50)  dollars  in  greenbacks,  twenty-five  ($25)  dollars  in  silver  certifi- 
ates,  and  twenty-five  ($25)  dollars  in  gold  coin.  He  still  refuses,  and  wants  all  in  United 
tates  gold  coin. 

You  deposit  the  money  in  Court,  or  in  the  bank  to  his  credit,  and  the  debt  is 
ttinguished  at  the  will  of  the  debtor,  without  the  consent  of  the  creditor.  This  is 
aused  by  the  fiat  of  the  Nation,  formulated  in  the  words,  "  This  shall  be  a  legal  tender 
\  satisfaction  of  all  debts,  public  and  private,  within  the  jurisdiction  of  the  United 
tates." 

This  fiat  on  the  gold,  the  silver  or  the  paper,  makes  the  money.  Nothing  else 
oes  or  can  make  money. 

Some  able  men  assert  that  the  true  test  of  money  is  the  fire  test.  That  is,  if  you 
ut  it  in  the  crucible  and  reduce  it,  a  dollar  will  be  left. 

Suppose  the  next  time  you  go  to  pay  a  debt  you  put  your  one  hundred  (§100) 
ollars  in  a  crucible  and  fire  up,  and  tender  to  the  creditor  the  fused  results.  Have 
ou  in  the  pot  money  or  bullion  ?  Can  you  force  the  creditor  to  receive  it  ?  No.  The 
loney  element  is  consumed.  The  fiat  of  the  Nation  has  disappeared.  The  fire  test 
f  money  is  the  same  on  gold  money  or  paper  money.  It  destroys  the  money  power 
f  the  article. 

President  Diaz  may  step  into  your  bank  and  deposit  one  thousand  Mexican  dollars, 

nd  ask  for  a  certificate  of  deposit  for  one  thousand  United  States  dollars.    You  say  no. 

Why  not  ?  "  says  President  Diaz,  "  that  is  a  one  thousand-dollar  legal  tender  where  I 

ame  from."     "Yes,"  you  reply,  "that  maybe  good  money  in  your  country,  but  it 

3  not  good  money  in  this  country." 

When  a  nation  becomes  powerless  to  enforce  and  make  good  its  fiat  the  money 
lement  of  the  article  ceases,  and  there  only  remains  an  article  of  more  or  less  com- 
mercial value. 

Money  is  an  artificial  product,  and  is  not  a  natural  product.  No  mine  has  ever 
een  discovered  out  of  which  money  was  dug  ready  stamped  with  a  nation's  fiat.  All 
ations  in  all  ages  have  made  different  forms  of  money. 

Money  has  no  intrinsic  value,  it  only  represents  labor  in  some  form.  The  gold  in 
be  mountains  has  no  intrinsic  value.  It  is  claimed  that  it  takes  a  dollar's  worth  of 
abor  to  produce  a  dollar  (25.8  grs.)  of  gold,  and  therefore  that  the  gold  dollar  has  an 
ntrinsic  value.  The  fact  is,  that  it  only  represents  a  dollar's  worth  of  work.  How 


10 

about  a  greenback  ? — when  printed  and  deposited  in  the  United  States  Treasury  it  rep- 
resents no  value.  It  is  then  the  same  as  the  gold  in  the  mountain.  But  when  some 
one  gives  the  United  States  (the  people)  a  dollar's  worth  of  labor  or  material  for  a  paper 
dollar,  thereafter  that  paper  dollar  represents  a  dollar's  worth  of  work  as  much  as  ever 
the  gold  dollar  did  or  could.  They  both  have  the  same  representative  value.  And  so 
long  as  the  Nation  retains  its  integrity  and  power  they  will  each  be  good  as  declared 
by  the  fiat. 

Gold  has  no  purchasing  power.  Nothing  can  be  purchased  except  by  the  consent 
of  the  vendor.  He  may  consent  to  sell  for  payment  in  iron,  cotton,  land,  or  ships.  If 
is  his  option  as  a  seller  to  sell  for  what  he  chooses.  It  is  only  when  a  debt  is  created 
that  the  debtor  can  extinguish  it  at  his  choice  with  legal-tender  money. 

DELUSIVE   SUBSTITUTES. 

Having  ascertained  what  money  is,  and  wherein  its  value  consists,  let  us  examine 
some  of  the  delusive  substitutes  for  money. 

The  State  Bank  notes  never  were  money.  They  were  only  ornamented  promissory 
notes  of  a  bank,  back  of  which  was  the  evasive  wealth  of  a  few  persons,  payable  ol 
demand,  if  too  many  were  not  presented  at  once.  Divested  of  ornament  the  faci 
reads : 


$5.00  THE  BANK  OF   WOOSTER.  $5.00 

WILL  PAY  FIVE  DOLLARS  TO  THE  BEARER, 

ON   DEMAND. 

. .  Cashier.  ....  President. 


No  fiat  of  the  Nation  ever  made  it  legal-tender  or  money.  It  was  a  promissory 
note  of  the  bank  alone 

All  efforts  for  half  a  century  to  give  it  money  characteristics  were  failures  and| 
delusions,  and  strewed  the  Nation  with  financial  wrecks  as  hereinbefore  shown. 

No  State  Bank  note  issue  can  ever  overcome  the  natural  laws  of  finances  above  setj 
out. 

Take  now  a  National  Bank  note  and  its  legal  reading  is : 


$5.00                        THE  FIRST  NATIONAL  BANK  $5.00 

of 

WILL   PAY   FIVE    DOLLARS   TO   THE   BEARER, 
ON   DEMAND. 

..Cashier.  ..President. 


This  also  is  the  promissory  note  of  the  bank  to  pay  money  on  demand.  On  the 
face  of  the  note  is  printed  .the  words  : 

"National  Currency,  secured  by  United  States  bonds,  deposited  with  the  Treasure) 
of  the  United  States. 


W.  S.  ROSECRANS, 

r." 


"  Registrar  of  the  Treasury. 

The  note  is  secured  by  a  United  States  bond  and  the  United  States  is  security  t( 
pay  the  bond.  The  bond  is  the  unsecured  promissory  note  of  the  United  States  tc 
pay  money  with  interest,  at  a  future  date  to  bearer. 


11 

We  here  have  an  evolution  process.  The  private  bank  note,  corresponding  to  the 
d  State  Bank  note,  has  added  to  it  the  endorsement  of  the  Nation,  and  that  endorse- 
icnt  alone  gives  it  value  and  the  confidence  of  the  people.  The  figure  cut  by  the 
ational  Bank  is  nothing  but  the  fly  on  the  wagon  wheel.  The  National  Bank  may 
jcome  insolvent,  still  the  note  passes  on  the  national  endorsement. 

If  the  national  endorsement  alone  makes  a  worthless  bank  note  as  good  as  gold, 
hy  not  let  the  bank  out  entirely  and  have  the  Nation  issue  the  money  legal-tender 
Dte  direct  ?  This  brings  us  to  consider  the  greenback : 


$5-  $5- 

THE   UNITED   STATES 

WILL     PAY     TO     THE     BEARER 

FIVE  DOLLARS. 
WASHINGTON,  D.  C. 

W.  S.  ROSECRANS,  CHARLES  FOSTER, 

Register.  Secretary. 


On  the  back  of  this  paper  is  the  Nation's  fiat :  "This  note  is  a  legal  tender  at  its 
ce  value  for  all  debts,  public  and  private,  except  duties  on  imports  and  interest  on 
e  public  debt." 

Back  of  this  fiat  is  the  wealth  of  this  Nation.  Over  2,500,000,000  acres  of  land 
th  all  of  the  cities,  villages,  banks,  farms,  railroads,  manufactories,  including  all  the 
Id,  silver  and  enlightenment,  inventive  genius,  push,  energy  and  fighting  capacity  of 
,000,000  people. 

As  there  is  not  enough  gold  and  silver  to  run  the  money  business  of  the  world  or  of 
is  Nation,  no  alternative  is  left  but  to  issue  paper  money  in  some  form. 

To  run  a  safe  business  the  paper  money  used  should  be  the  best  that  can  be  issued, 
should  be  such  that  every  man  can  readily  pass  it  to  another  in  any  part  of  the 
nited  States  for  the  same  value  that  he  received  it. 

The  joint  promise  of  65,000,000  of  people  to  pay  a  dollar  in  gold  to  the  bearer  is 
ore  liable  to  be  fulfilled  than  the  promise  of  any  State  Bank  or  corporation. 

Being  a  legal  tender  it  can  always  be  paid  out  to  depositors  at  its  face  value.  Under 
ch  a  system  banks  have  only  to  guard  against  a  depositors'  run,  and  are  free  from 
ns  on  circulation. 

An  increase  in  the  legal-tender  paper  money  would  result  in  more  gold  money 
turning  to  the  Treasury.  For  the  paper  money  of  the  Nation  is  free  from  taxation, 
id  the  gold  and  silver  coin  must  pay  taxes.  This  is  a  premium  of  over  I  per  cent, 
r  year,  and  would  chase  the  greater  part  of  the  coin  into  the  United  States  Treasury 

escape  taxation. 

We  are  safe,  in  view  of  the  foregoing  facts,  in  asserting  that  only  the  General 
overnment  can  issue  money.  That  all  other  efforts  are  delusive  substitutes  that  build 

indebtednesses  that  they  cannot  legally  extinguish  and  have  properly  been  termed 
iper  lies. 

The  National  money  notes  are  readily  received  at  face  value,  and  each  citizen  can 
LSS  them  for  the  same  value  he  received  them  for. 

ELASTICITY. 

But  some  one  says  that  National  money  is  not  elastic.  Well,  you  could  not  expect 
to  be  so  unless  you  printed  it  on  inclia  rubber.  No  money  is  elastic.  State  Bank 
tes,  National  Bank  notes,  no  notes  are  elastic.  I  make  these  absurd  illustrations  to 
nphasize  the  fallacy  of  elastic  money. 

A  money  system  may  be  elastic  in  a  financial  sense,  but  money  is  never  elastic. 

But  the  system  is  not  money,  and  an  elastic  system  can  use  good  money  as  readily 


12 

as  bad  money,  and  a  non-elastic  system  will  fail  equally  with  bad  money  as  with  goo< 
money. 

The  financial  systems  of  the  United  States  have  been  non-elastic.  The  financia 
systems  of  the  States  were  elastic. 

Now,  if  we  combine  the  desirable  elastic  systems  of  the  States  and  the  desirabl 
good  money  legal-tender  of  the  United  States  we  can  have  what  has  never  yet  beei  I 
had  in  the  United  States — safety  and  elasticity. 

What  is  the  principle  of  elasticity  so  desired  and  sought  after?  It  is  this,  that  a  I 
certain  seasons  of  the  year  a  large  volume  of  money  is  required,  at  other  seasons  j 
smaller  volume.  The  problem  then  is,  how  can  we  have  this  large  volume  whei| 
required  and  not  pay  or  lose  interest  on  it  when  idle. 

How  did  the  State  Banks  do  it  ?  Why,  issued  their  own  notes  to  meet  the  largi  | 
demand,  and  let  them  lie  idle  in  their  vaults  when  not  needed. 

Apply  the  same  principle  to  a  National  issue.  When  not  used  they  lie  idle  in  thil 
United  States  Treasury  with  no  cost  or  loss  of  interest  to  any  one. 

When  a  large  volume  is  required  at  a  certain  season,  provide  that  on  proper  bond;  | 
of  the  United  States  or  of  States,  cities  or  counties  that  the  National  Banks  can  borrov' 
this  money,  say  at  I  percent,  or  2  per  cent,  interest  to  the  Government  and  reloan  itt<! 
their  customers  at  a  reasonable  profit,  during  the  time  the  demand  exists.  As  soon  at! 
the  customers  pay  it  into  the  banks,  the  banks  can  return  it  to  the  United  State;  | 
Treasury,  there  to  lie  idle  until  needed. 

To  prevent  banks  encouraging  wild  speculation  based  on  low  interest,  let  the  rate  o 
interest  paid  the  United  States  for  the  money  be  gauged  on  a  rising  scale.  Say  2  pe: 
cent,  for  the  first  $100,000  used  by  a  bank,  3  per  cent,  for  the  next  $100,000,  and  so  01, 
until  the  rate  reached  a  point  where  it  ceased  to  pay  to  take  it  out. 

This  is  the  natural  law  adopted  by  banks. 

You  see  that  elasticity  in  this  plan  holds  the  same  relation  between  a  United  States 
issue,  the  United  States  Treasury  and  banks  that  is  held  between  a  State  Bank  issuer] 
the  Bank  Treasury  and  the  borrower.  In  the  National  system  it  is  good  money  anc| 
elasticity.  In  the  State  Bank  system  it  is  elasticity  and  bad  money. 

The  rate  of  interest  should  average  less  than  the  average  profit  on  the  industries  oi  I 
the  country.  If  the  rate  of  interest  averages  higher,  then  slowly  but  certainly  the  indus- 1 
tries  will  be  eaten  up  by  the  interest  and  transferred  to  the  money  lender.  This  law  o: 
finances  transferred  the  lands  and  industries  of  England  to  the  capitalist  and  will  dc 
the  same  in  any  nation.  No  question  but  that  of  time  is  involved  in  the  result. 

If  the  averaged  rate  of  interest  is  less  than  the  averaged  profit  on  the  industries  oi  I 
the  people,  then  the  producers  will  annually  increase  in  wealth  as  well  as  the  mone)  | 
lenders,  giving  prosperity  to  all. 

CONVERTIBILITY. 

Such  a  National  issue  of  paper  money  would  possess  the  same  degree  and  ch; 
ter  of  convertibility  that  is  possessed  by  greenbacks. 

The  wealth  and  power  of  65,000,000  people  are  back  of  each  dollar  of  paper  rm 
to  exchange  it  for  coin  when  required. 

It  is  far  more  probable  that  the  Nation  will  be  supplied  with  coin  for  taking 
paper  money  when  presented  than  that  any  State  Bank  or  other  combination  can. 

In  fact  convertibility  reaches  a  maximum  in  the  National  issue,  and  does  not 
approach  a  maximum  in  any  other  system. 

Should  the  drain  of  coin  run  the  Nation  short  it  can  at  any  time  secure  it  by 
tion  or  sale  of  bonds.     No  other  system  can  do  this. 

UNIFORMITY. 

The  National  system  herein  proposed  is  the  only  one  that  can  possess  uniformi 
A  uniform  system  of  paper  money,  to  replace  all  present  forms  of  certificates  and  cur- 
rency, would  give  a  circulation  of  uniform  legal  effect  and  appearance.  Every  citizen 
holding  a  dollar  of  paper  money  would  have  the  same  legal  obligation,  and  the  obliga- 
tion of  the  Government  to  the  holders  would  be  uniform  and  more  easily  met  by  a 
uniform  financial  plan. 

ATTRIBUTES   OF   A   PERFECT    SYSTEM. 

All  writers  concur  that  the  attributes  of  a.  perfect  system  of  paper  money  for  this  or 
any  other  nation  are:  ist.  Safety.  2d.  Elasticity.  3d.  Convertibility.  4th.  Uni- 
formity. 


13 

I  These  points  were  specially  emphasized  by  Hon.  John  Jay  Knox  in  his  address 
Ifore  the  National  Bankers'  Convention  in  New  Orleans  in  1891. 
I  In  the  system  herein  suggested,  and  which  I  more  elaborately  presented  in  other 
•dresses,  these  attributes  are  brought  to  a  maximum  as  follows :  Safety  consists  in 
jje  whole  wealth,  resouices  and  power  of  65,000,000  people  and  2,500,000  acres  of  land, 
Ith  all  the  wealth,  civilization  and  enlightenment  of  the  most  peaceful,  prosperous  and 
lid  stable  government  on  the  face  of  the  earth. 

I  The  elasticity  is  met  by  the  Nation  furnishing  a  sufficient  volume  to  meet  the  extra 
Imands  of  seasons  and  trade,  and  providing  for  its  retirement  to  the  National  Treas- 
ly  when  not  needed  to  escape  paying  interest. 

I  Convertibility  is  based  on  the  ability  of  the  Nation  writh  all  of  its  resources  and 
Iwer  to  furnish  coin  sufficient  to  exchange  for  any  of  the  currency  when  needed. 
I  One  thing  is  sure:    If  the  nation  cannot  meet  the  question  of  convertibility  no 

tern  of  State  or  individual  banks  need  ever  try. 

Uniformity  in  every  respect  is  obtained  by  a  single  national  issue  of  money.     No 
ler  system  can  ever  attain  it. 

Out  of  this  uniform  national  issue  will  come  stability  of  securities,  of  business/of 
)duction,  of  manufactures  and  of  commerce. 

Banks  will  lose  less  by  depreciation  of  real  and  personal  securities  and  by  reason  of 
5S  failures. 

They  can  profitably  loan  at  a  lower  rate  of  interest,  having  less  loss  on  capital. 

Long  time  loans  to  carry  out  railroad  and  other  long  time  enterprises  can  be  based 

such  a  system  as  herein  suggested. 

No  panacea  for  financial  blunders  and  frauds  exists  in  this  or  any  other  system. 
Tt  only  claim  that  the  financial  sense  of  the  Nation  will  herein  find  the  best  and  sim- 
[est  money  and  money  systems  for  their  use. 

As  bankers  we  will  prosper  best  in  the  long  run  under  that  system  that  gives  the 
reatest  prosperity  to  the  masses. 

I  respectfully  suggest  that  all  efforts  to  have  Congress  delegate  this  financial  power 
any  combination  of  men  or  corporations  is  dangerous,  and  should  meet  the  never- 
iding  opposition  of  all  Americans. 

It  should  remain  in  the  hands  of  the  Nation  for  the  common  good. 

We  may  be  bankers  in  our  day  and  reap  the  profits  of  a  system  partial  to  us,  but 
ir  descendants  will  probably  not  be  bankers,  and  they  will  suffer  from  the  operation 
any  unjust  system. 

As  bankers  let  us  unflinchingly  oppose  everything  but  the  best  money  and  the  best 
/stem  that  the  intelligence  of  the  nineteenth  century  can  give. 

At  the  close  of  the  address  the  speaker  offered  the  following  resolution,  which  was 
lanimously  adopted  by  the  Convention  by  a  rising  vote : 

Resolved,  That  it  is  the  judgment  of  this  Convention  that  a  State  Bank  note  issue  of 
^oney  is  unsafe  and  undesirable. 


[507 1C] 


THE  ESSENTIAL  ELEMENTS 


MONETARY  SYSTEM. 


ADDRESS   BEFORE   THE   WORLD'S  CONGRESS 
(  )!•    BANKERS    AND    FINANCIERS, 
CHICAGO,    JUNE, 


Hv    R.   M.   WIDNEY, 

Preside-ill    1  "nivrr-it  v 


CHICAG 

RAND,    McN  \I.l  V 
1893- 


THE  ESSENTIAL  ELEMENTS 


OF   A 


MONETARY  SYSTEM 


ADDRESS  BEFORE  THE  WORLD'S  CONGRESS 

OF  BANKERS   AND   FINANCIERS, 

CHICAGO,  JUNE,  1893. 


BY   R.   M.  WIDNEY, 

President  University  Bank  of  Los  Angeles,  Cal. 


CHICAGO  : 
RAND,  McNALLY  &  CO. 

1893. 


I 


PREFACE. 

SINCE  the  accompanying  address  was  prepared,  financial 
events  have  rapidly  evolved.  The  effect  of  the  panic 
and  stringency  have  demonstrated  the  insufficient  sup- 
ply of  money. 

The  closed  industries  and  the  tramping  tens  of  thousands 
of  unemployed  seeking  labor  or  food,  forecast  a  great  danger 
to  the  country. 

The  laborer  has  nothing  to  sell  but  his  labor,  and  the  mar- 
ket for  that  is  destroyed.  No  law  requires  him  to  starve.  The 
consequence  is  apparent. 

The  remedy  lies  exclusively  in  the  hands  of  Congress.  And 
Congress  alone  is  responsible  for  the  consequences. 

Had  proper  financial  legislation  been  enacted  in  1891  or 
1892  the  past  damages  would  have  been  averted,  and  to-day 
the  nation  would  be  in  the  midst  of  prosperity. 

The  conditions  will  grow  worse  until  our  financial  system  is 
reduced  to  a  scientific  system  worthy  of  the  intelligence  of  our 
nation. 

If  our  political  parties  will  for  a  time  stop  trying  to  give 
each  other  a  "black  eye,"  and  unite  in  a  patriotic  effort  to  ben- 
efit the  people,  by  the  best  and  speediest  legislation  possible, 
they  will  succeed  in  solving  the  problem  and  in  hastening  the 
day  of  national  prosperity. 

NOVEMBER  3,  1893. 


THE   ESSENTIAL   ELEMENTS  OF   A  MONETARY 

SYSTEM. 

BY  JUDGE  R.  M.  WIDNEY,  Los  ANGELES,  CAL. 

THE  essential  elements  of  a  monetary  system,  as  con- 
ceded by  text-books  and  writers,  are  money  volume, 
safety,  elasticity,  convertibility,  uniformity,  and  cir- 
culation ;  but  the  essential  principle  underlying  all  of  these 
is  that  the  monetary  system  must  not  omit  any  one  of  them, 
and  must  have  each  as  nearly  perfect  as  possible.  It  is  use- 
less to  discuss  which  wheel  of  a  watch  is  essential,  for  if 
you  omit  any  one  it  don't  go,  and  if  you  have  an  imperfect 
wheel  the  watch  is  practically  worthless.  Assuming  the 
above  elements  to  be  essential,  I  shall  more  particularly 
discuss  the  essential  factors  of  these  elements  and  show 
how  they  may  be  combined  to  produce  the  best  system.  It 
must  be  borne  in  mind  that  our  population  is  increasing, 
our  commerce  is  expanding,  our  industries  are  growing,  and 
the  vision  of  the  future  is  more  brilliant  than  the  facts  of 
the  present.  The  future  can  no  more  be  attained,  or  main- 
tained, on  present  facts  and  conditions  than  the  present 
growth  could  be  attained,  or  maintained,  on  the  facts  of  the 
colonial  days.  We  have  outgrown  the  furnishings  of  the 
past,  and  the  future  can  not  be  provided  for  by  our  present 
worn-out  financial  garments  and  appliances. 

Writers  generally  concede  that  money  as  a  mechanism  of 
•exchange  is  one  of  the  absolutely  essential  factors  of 
civilization.  It  is  no  exception  to  the  foregoing  truths,  and 
the  present  and  future  volume  and  methods  of  circulation 
can  not  be  adequately  met  by,  and  must  not  be  limited  to, 
past  methods  and  supplies.  "  Either  our  volume  of  money 
must  be  increased  to  meet  the  wants  of  our  growing  country, 


6 

or  the  business  of  the  country  must  be  periodically  killed 
off  until  it  is  within  the  compass  of  our  circulation."  There- 
fore there  opens  up  before  us,  there  is  presented  to  us,  and 
there  is  forced  upon  us,  and  not  only  upon  us  but  upon  each 
nation,  the  proper  solution  of  the  financial  question  for  the 
present  and  future  users  of  money.  The  essential  elements- 
of  a  monetary  system  must  be  ascertained.  The  various 
systems  must  be  analyzed,  and  from  the  analysis  we 
must  eliminate  the  non-essentials,  and  from  the  essentials 
there  must  be  constructed  a  system  for  international  and 
domestic  use  that  will  be  free  from  unnecessary  friction  or 
dislocation.  It  should  possess  as  many  reciprocating  and 
automatic  adjustments  as  the  uses  of  the  age  demand.  In 
fact  it  should  stand  in  finances  as  electrical  perfection 
stands  to-day  among  the  sciences. 

The  use  for  money  is  domestic  and  international.  A 
government  is  a  joint  contract  entered  into  by  the  people 
for  their  mutual  benefit,  and  the  laws  enacted  are  simply 
the  legal  evidence  of  the  terms  and  conditions  of  the  con- 
tract. Hence  each  nation  can  create  and  control  its. 
domestic  money  relations,  and  can  also  dictate  what  it  will 
accept  as  money  from  other  nations.  But  there  is  no  inter- 
national money  agreement  or  compact  between  nations  as 
to  what  shall  be  used  as  money.  Hence  no  nation  can  force 
other  nations  to  accept  any  particular  article  as  money.  In 
fact  payment  in  each  nation  can  only  be  forced  by  using  the 
legal-tender  money  of  that  particular  nation. 

The  inconvenience  of  having  no  legal  international 
money  has  led  the  merchants  of  the  different  nations  to- 
adopt,  by  common  consent,  gold  and  silver  bullion  as  the 
articles  for  the  settlement  of  international  accounts ;  but 
if  the  creditor  should  refuse  to  accept  either  the  gold  or 
silver  bullion,  the  debtor  would  have  to  sell  it  at  its  com- 
mercial value  for  legal-tender  money  of  the  creditor  nation 
and  pay  him  with  that  legal-tender.  If,  therefore,  in  con- 
sidering the  essential  elements  of  a  monetary  system  we 
shall  bear  in  mind  that  we  have  no  power  over  the  inter- 


national  money  system,  and  that  our  work  must  be  limited 
to  the  domestic  system,  it  will  materially  aid  in  clearly 
understanding  what  is  essential  and  what  is  not  essential. 

INTERNATIONAL   CLEARING  HOUSE. 

Before,  however,  dismissing  the  international  questions  I 
would  suggest  that  great  commercial  benefits  would  arise 
from  the  establishment  of  an  international  clearing  house, 
thus  avoiding  all  handling  and  risk  of  transshipment  except 
of  final  balances.  This  could  be  readily  accomplished  by 
each  nation  designating  its  treasury  or  any  other  place,  on 
the  responsibility  of  that  nation,  as  the  place  of  deposit  for 
balances.  Owing  to  the  large  amount  of  these  balances 
merchants  would  not  feel  safe  with  less  than  a  national 
responsibility  for  the  money.  The  banks  in  each  nation 
having  international  accounts  of  debit  or  credit  could  clear 
in  their  local  clearing  houses,  and  deposit  in  the  national 
treasury  gold  for  the  balance.  These  national  treasuries 
would  in  like  manner  clear,  and  the  final  balance  could  be 
shipped  to  the  creditor  treasury  for  payment  to  local  banks 
to  which  it  belonged,  or  the  balances  could  be  held  subject 
to  the  order  of  the  creditor  treasury  for  future  balances  or 
for  future  shipment  on  demand.  Such  a  system  would 
make  the  volume  of  money  in  the  world  much  more  efficient, 
and  would  eventually  lead  to  an  international  money  system 
for  the  common  good. 

In  the  appendix  to  this  address  is  a  suggested  form  of  a 
bill  for  Congress  including  this  subject,  vesting  in  the  Sec- 
retary of  the  Treasury,  with  the  approval  of  the  President, 
the  power  to  establish,  in  co-operation  with  other  nations, 
such  a  clearing-house  system.  It  should  receive  such 
amendments  and  changes  as  will  add  to  its  efficiency  and 
safety.  [See  proposed  bill,  Sec.  5.]  While  the  international 
system  of  clearing  will  give  great  relief  in  finances  from 
the  present  crude  and  cumbersome  method,  it  will  not  solve 
the  question  as  to  what  shall  be  used  as  domestic  money, 


8 

nor  how  it  shall  be  issued,  or  circulated,  or  what  the  volume 
shall  be.  As  the  citizens  of  each  nation  will  have  to  settle 
this  as  their  local  interests  require,  I  shall  confine  my 
further  remarks  on  the  subject  to  the  financial  needs  of 
this  nation,  leaving  the  representatives  of  other  nations  to 
discuss  the  efficiency  of  their  local  finances. 


IN   THE   UNITED    STATES   OF  AMERICA. 

It  will  probably  be  conceded  without  argument  that 
business  demands  the  best  money  and  the  best  system  for 
readily  placing  money  at  the  point  of  use.  The  closest 
approximation  to  these  will  give  us  the  essential  elements  of 
a  monetary  system.  Money  is  that  which  will  at  all  times 
and  under  all  circumstances  perform  the  functions  of 
money.  In  fact,  that  which  will  not  so  perform  every 
money  function  is  not  money.  The  current  definitions  of 
money  are  open  to  objections  as  either  including  non-essen- 
tial elements  or  excluding  that  which  is  essential.  I  offer 
the  following  as  a  definition  that  is  correct  in  law  and  in 
fact :  "  Money  is  that  article  in  a  nation  with  which  a  debtor 
can  extinguish  his  debt  without  the  consent  of  the  creditor 
at  a  fixed  unit  of  value."  In  other  words,  it  must  be  a  legal 
tender  by  the  supreme  law  of  the  land  in  the  extinguish- 
ment of  debts  within  the  jurisdiction  of  the. law.  Anything 
not  possessing  the  legal-tender  element  above  is  only  an 
article  of  merchandise.  Hence  gold  or  silver,  copper  or 
nickel,  however  fine,  whatever  their  form  or  device,  without 
the  statuary  _/£#/  are  not  money  and  are  articles  of  commerce 
alone.  And  gold  or  silver,  having  the  nation's  legislative 
fiat  stamped  upon  them,  cease  to  be  money  as  soon  as  they 
pass  out  of  the  jurisdiction  of  the  laws,  or  when  the  Gov- 
ernment becomes  unable  to  enforce  its  fiat.  The  gold  or 
silver  coins  of  England,  Germany,  or  France,  or  of  the 
United  States  are  not  money  in  a  foreign  nation,  but  are 
only  received  as  bullion,  at  its  commercial  value,  and  even 
then  can  only  pass  by  consent  of  the  one  receiving  it.  This 


definition  of  money  not  only  excludes  gold  and  silver 
bullion,  but  also  all  checks,  drafts,  clearing-house  certifi- 
cates, State  bank  notes,  or  any  other  order  for  legal-tender 
money.  In  fact,  they  are  only  legal  contracts  or  obligations 
for  the  payment  of  legal-tender  money,  and  the  one  signing 
them  in  final  settlement  must  obtain  "  legal-tender  money  " 
with  which  to  extinguish  the  contract.  Private  individuals, 
corporations,  or  States  can  not  issue  money.  They  can 
only  contract  to  pay  money.  Only  the  concurrent  agree- 
ment of  our  sixty-six  million  people  expressed  in  an  act  of 
Congress  makes  an  article  money  for  domestic  use.  The 
.statutory  words,  "  This  shall  be  a  legal  tender  in  satisfac- 
tion of  all  obligations  for  the  payment  of  money  within  the 
jurisdiction  of  the  United  States,"  and  impressed  on  gold, 
.silver,  copper,  nickel,  or  paper,  invests  them  with  full  money 
functions  and  constitutes  them  money.  It  therefore  appears 
that  this  money  function  is  purely  a  creation  of  statutory 
enactment,  and  with  it  an  article  is  money,  without  it  the 
article  is  not  money.  Silver  was  demonetized.  What  does 
that  mean  ?  Why,  that  the  money  function  given  by  statu- 
tory enactment  was  removed  from  silver  and  it  ceased  to  be 
money.  Therefore,  we  conclude  that  the  essential  element 
of  money  is  its  power  to  extinguish  a  debt  at  the  will  of 
the  debtor,  without  the  consent  of  the  creditor,  at  a  fixed  unit 
of  value. 

For  the  purposes  of  this  address  the  financial  transactions 
of  the  world  may  be  divided  into  two  classes,  in  one  of 
which  the  transactions  may  be  satisfactorily  consummated 
without  the  use  of  money;  the  other  can  only  be  closed 
up  by  the  use  of  that  which  is  legal-tender  money.  In  the 
first  are  embraced  all  cases  where  checks,  drafts,  clearing- 
house certificates,  and  other  non-legal-tender  orders  for 
money  are  accepted  by  the  creditor,  he  taking  his  chances 
on  finally  getting  legal-tender  money.  This  class  represents 
about  eighty-five  per  cent  of  business  transactions  with 
safety  and  financial  ease.  When  it  reaches  ninety  per  cent 
there  is  a  perceptible  inconvenience  and  tightness  in  the 


10 

money  market,  many  finding  accommodations  difficult; 
the  financial  reports  stating  that  "  the  demand  for  money 
is  quite  brisk  and  ruling  at  higher  rates  of  interest,"  and 
that  selling  on  the  stock  market  is  active  with  the  bear 
influence  predominating.  As  the  percentage  of  credit 
transactions  advances  beyond  ninety  per  cent  the  dan- 
ger rapidly  increases,  with  more  failures  and  general  evi- 
dences of  distress,  and  terminates  in  a  crisis  and  a  panic  at 
ninety-five  per  cent.  As  money  is  not  required  in  the  above 
transactions  they  may  be  dismissed  from  the  discussion  of 
the  subject.  It  is  the  remaining  percentage  of  business, 
the  final  liquidation  of  all  the  credits,  that  requires  and  can 
only  be  closed  up  by  the  use  of  legal-tender  money.  Inter- 
nationally the  people  by  common  consent  use  gold  to  settle 
the  final  credit  obligations.  By  a  like  common  consent, 
expressed  in  the  form  of  an  act  of  Congress,  the  people  of  the 
United  States  use  gold,  silver,  copper,  nickel,  and  paper  legal 
tender  to  settle  the  final  credits  between  individuals,  leaving 
really  in  its  place  a  general  credit  obligation  from  the  sixty- 
six  millions  of  people  to  the  individual  creditor.  Gold  has  a 
commercial  value  based  upon  its  supposed  cost  of  production 
representing  say  twenty-three  and  twenty-two  one-hun- 
dredths  grains  of  fine  gold  for  a  dollar  in  labor.  When  that 
weight  of  gold  is  impressed  with  the  money  fiat  of  the  nation, 
it  is  supposed  to  be  the  best  money,  for  the  reason  that  if  the 
fiat  of  the  nation  should  fail  the  owner  would  still  have  the 
commercial  value  left.  It  is  therefore  said  to  possess  intrin- 
sic value ;  but  in  fact  there  is  very  little  intrinsic  value,  for  no 
one  receives  it  except  upon  the  belief  that  he  can  get  rid  of 
it  in  exchange  for  other  things.  No  one  would  accept  it  if 
he  were  forced  to  finally  keep  it.  It  is  properly  denomi- 
nated a  mechanism  of  exchange.  Any  other  article  accepted 
by  common  agreement  for  the  purpose  is  equally  valuable 
as  money  for  domestic  use.  However,  so  long  as  the  mer- 
chants of  the  different  nations  regard  gold  as  having  an 
intrinsic  value,  so  long  will  they  accept  it  as  a  money  of 
final  payment,  at  its  commercial  value  as  an  article  of  final 
payment  of  debts. 


11 

NOT   ENOUGH    GOLD. 

So  long  as  the  people  in  the  world  desire  to  accept  gold 
as  an  article  of  commercial  value  in  payment  of  final  bal- 
ances, they  will  continue  to  do  so.  Therefore,  if  there  was 
enough  to  meet  the  business  wants  of  the  growing  civiliza- 
tion of  the  world,  no  question  would  arise  as  to  the  kind  of 
money.  But  the  total  volume  of  gold  coin  and  bullion  in 
the  world  is  only  $3,984,256,589,  a  per  capita  of  three  dollars 
and  twenty-two  cents  for  the  world's  population.  This  does 
not  equal  the  present  money  volume  of  the  United  States 
and  France. 

The  average  annual  production  of  gold  for  the  eight 
years  1881  to  1889  was  $108,376,258,  or  eight  cents  per 
capita.  The  annual  consumption  of  gold  in  the  industrial 
arts  is  about  $64,00x3,000,  a  per  capita  of  five  cents.  This 
leaves  an  annual  increase  for  money  purposes  of  only  three 
cents  per  capita.  It  will  be  conceded  at  once  that  these 
small  sums  of  stock  and  increase  never  can  either  supply  or 
keep  pace  with  the  growing  business  of  the  world. 

In  the  United  States  the  supply  May  i,  1893,  was  as 
follows : 

Gold  coin  and  bullion $613,042,879  per  capita  of  $9.00 

Annual   product 32,976,000    "         "  .50 

Used  in  the  arts 16,679,000    "         "  .25 

Balance  for  money  use 16,279,000    "         "  .25 

Yet  the  United  States  is  using  a  money  volume  of  about 
twenty-four  dollars  per  capita,  of  which  gold  is  only  nine 
dollars  per  capita,  and  her  closing  banks,  her  failing  mer- 
chants, and  crashing  industries  cry  aloud  for  a  greater 
volume. 

The  present  struggle  for  gold  among  the  different 
nations  demonstrates  that  there  is  not  enough  of  it  to  do 
the  money  work  of  the  world,  both  domestic  and  inter- 
national. If  freed  from  domestic  money  use  the  gold  of  the 
world  would  about  satisfy  the  international  demand,  until 
such  time  as  the  nations  by  a  common  law  shall  adopt  some 


additional  and  other  money.  Therefore  necessity  forces 
each  nation  to  use  other  material  for  money  in  order  to 
give  a  sufficient  volume  for  its  domestic  use. 

HOW  ABOUT  THE   USE   OF   SILVER. 

The  statistics  show  that  it  is  not  of  sufficient  volume  even 
if  all  the  nations  were  to  adopt  it  for  money  use.  Its  volume 
in  the  world  is : 

Coin  and  bullion $4,512,754,655  per  capita  $3.65 

Annual  product _._ _      121, 389^42    "         "          .09 

Industrial  uses. 21,660,000    "         "          .02 

Annual  increase  for  money 99,729,240    "         "          .07 

Combined  with  the  former  statistics  for  gold  the  two 
represent  $144,005,506,  or  ten  cents  per  capita,  as  the  annual 
increase. 

In  the  United  States  the  silver  volume  of  coin  and 
bullion  is : 

Stock $687,614,551  per  capita  $10.00 

Annual  product 64,768,730     "         "  .97 

Industrial  uses _ 8,767,000     "         "  .85 


Annual  increase  for  money $56,001,730 

But  it  must  be  borne  in  mind  that  nearly  the  total  stock 
of  silver  in  the  United  States  is  in  money  use  either  as  coin 
or  as  certificates  issued  for  the  silver  bullion,  these  certifi- 
cates aggregating  May  i,  1893,  $326,806,504. 

The  total  stock  of  gold  and  silver  coin  and  bullion  as 
recently  held  by  the  leading  six  commercial  nations  was  as 
follows : 

England $    650,000,000  per  capita  $18.00 

France 1,600,000,000    "         "        43.00 

Germany 645,000,000    "         "         14.00 

Russia 200,000,000    "         "         12.50 

Italy 200,000,000    "         "          6.00 

United   States 1,300,657,430    "         "         20.00 

This  leaves  about  two  dollars  per  capita  for  the  use  of  the 
other  nations  and  peoples.  Never  before  in  the  history  of 


13 

the  world  has  the  human  race  so  generally  advanced  to 
commercial  and  civilized  growth.  Everywhere  the  unciv- 
ilized and  unsettled  continents  and  regions  are  being 
opened  up  and  developed,  and  as  this  occurs  they  draw 
coin  money  from  the  older  nations.  The  new  civilizations 
can  not  issue  a  credit  money,  for  they  have  not  yet  an 
established  community  credit.  They  are  therefore  forced 
to  use  gold  and  silver  as  money.  This  causes  gold  and 
silver  to  flow  to  such  new  communities  from  the  older 
nations,  and  will  continue  to  deplete  their  stock  until  more 
of  an  equal  distribution  is  reached.  But  silver  labors  under 
another  disadvantage.  Explain  it  as  you  may,  the  fact  still 
remains  that  silver  is  not  received  largely  as  an  article  of 
final  settlement  of  debts.  Its  commercial  value  is  such  that 
to  overcome  the  objection  of  bulkiness  it  is  necessary  for  a 
nation  to  add  a  heavy  per  cent  of  its  credit  to  the  commer- 
cial value  to  equalize  a  convenient  weight,  four  hundred 
and  twelve  and  one-half  grains  to  twenty-three  and  twenty- 
two  one-hundredths  grains  of  gold. 

FREE   COINAGE. 

It  is  urged  that  free  coinage  will  give  us  more  money  of 
final  payment.  The  power  of  ultimate  or  final  payment  of 
debt  must  be  a  commercial  value  equal  to  the  debt.  Gold  as 
a  final  payment  is  based  on  its  bullion  or  commercial  value 
and  nothing  else.  Gold  coin  of  the  United  States  when 
used  for  final  payment  out  of  our  jurisdiction  as  a  nation  is 
used  only  as  bullion  by  weight.  The  same  is  true  when 
foreign  gold  coins  are  used  in  the  United  States.  In  each 
case  the  money  power  of  the  coins,  which  is  only  the  fiat  or 
credit  of  the  nation,  ceases  to  exist  at  the  boundary-line  of 
the  nation  coining  it,  and  the  commercial  value  as  fixed  by 
the  demands  of  commerce  alone  enters  into  the  final  pay- 
ment. No  act  of  Congress  or  of  any  government  has  power 
outside  of  the  jurisdiction  of  the  nation;  therefore  when 
gold  or  silver  coih  crosses  the  high  seas  it  goes  as  bullion  at  its 
commercial  value  alone.  According  to  the  laws  of  nature 


14 

gold,  silver,  pennies,  .nickels,  or  Chinese  brass  tokens  as 
articles  of  final  payment  between  nations  must  each  alike 
lay  aside  its  garment  as  money,  and  enter  the  scales  of  com- 
merce as  naked  metal  to  be  weighed  in  the  balance,  at  the 
international  commercial  value.  Should  this  nation  put  its 
fiat  of  free  coinage  on  silver,  sixteen  to  one,  it  will  only  add 
the  credit  of  this  nation  of  sixty-six  millions  of  people  to  the 
bullion  value,  and  this  credit  value  will  not  extend  beyond 
our  jurisdiction.  When  it  goes  abroad  as  a  money  of  final 
payment,  the  nation's  fiat  dies  at  the  nation's  boundary-line 
and  it  goes  as  bullion  at  the  market  price.  This  is  true 
whether  the  money  is  gold,  silver,  copper,  nickel,  brass,  or 
iron. 

What  can  free  coinage  do  at  sixteen  to  one  ?  It  is  com- 
posed of  two  things,  the  bullion  value  of  the  silver  added  to 
the  credit  value  of  sixty-six  millions  of  people.  The  sixty- 
six  millions  own  their  credit  in  fee  simple  absolute.  It 
is  their  property  at  its  commercial  value  as  certainly  and  as 
righteously  as  the  silver  is  the  property  of  the  silver  owners 
at  its  commercial  value.  Each  thus  under  the  law  of  nature, 
being  the  owner  of  separate  properties,  neither  one  has  the 
right  to  rob  the  other.  The  sixty-six  millions  of  people  have 
no  right  to  appropriate  or  confiscate  by  act  of  Congress  the 
commercial  value  of  the  silver  from  the  silver  owners ; 
neither  have  the  silver  owners  any  right  by  act  of  Congress 
to  appropriate  or  confiscate  the  credit  or  fiat  value  of  the 
sixty-six  millions. 

The  commercial  value  of  the  silver  output  of  the  United 
States  is  about  $47,288,207  annually.  The  credit  or  fiat  value 
of  the  sixty-six  millions  of  people  which  free  coinage  will 
confiscate  is  $24,734,558  annually.  The  fight  of  the  free 
coinage  interests  is  to  appropriate  or  confiscate  this  credit  of 
sixty-six  millions  of  people,  worth  $24,734,558  per  year  and 
worth  forty-five  cents  on  every  ounce  of  silver,  by  an  act  of 
Congress,  and  add  it  to  the  commercial  bullion  value  of  silver 
and  make  the  silver  owners  possessors  of  both.  When  and 


15 

where  in  the  history  of  the  race  has  such  a  transaction 
received  the  approbation  of  study,  reason,  and  justice  ? 

But  the  free  coinage  men  claim  that  in  return  they  give 
an  increased  volume  of  money  to  the  masses,  and  that  this 
increased  volume  of  money  increases  the  value  of  wages 
and  property.  The  fallacy  of  such  an  argument  is  in  assum- 
ing that  free  coinage  is  the  only  way  to  increase  the  volume 
of  money.  I  agree  that  we  must  have  an  increased  volume 
of  money  and  that  such  an  increase  of  money  is  in  the 
direct  interest  of  the  masses;  but  the  increased  volume 
does  not  depend  on  free  coinage  of  silver  even  if  all  the  sil- 
ver should  be  so  used.  But  if  the  sixty-six  millions  of  peo- 
ple buy  the  silver  output  at  its  commercial  value,  $47,288,207, 
and  then  coin  it  into  legal-tender  dollars  or  issue  legal-tender 
certificates  to  the  same  amount,  then  the  volume  of  money 
would  be  the  same  as  under  free  coinage,  and  the  sixty-six 
millions  of  people  would  save  the  credit  value  of  $24,734,558, 
annually.  If  the  people  are  to  be  benefited,  why  not  begin 
the  benefit  by  saving  them  this  credit  value  of  $24,734,558 
annually  which  inures  to  the  benefit  of  the  people ;  but  if  this 
credit  of  $24,734,558  is  to  be  donated  annually  to  a  class  many 
of  whom  are  foreigners,  let  a  proper  committee  be  appointed 
to  see  what  class  shall  be  most  worthy  to  receive  this  royal 
pension.  Better  donate  it  annually  to  the  farmers  and  pro- 
ducers until  their  farm  mortgages  are  paid  off,  or  pay  it  to  the 
laboring  classes  with  which  to  buy  homes  for  their  tenant 
families,  or  let  the  nation  spend  it  among  the  laboring  classes 
on  public  works ;  on  our  rivers,  our  highways,  our  navies,  our 
coast  defenses,  our  public  buildings,  and  our  public  educa- 
tional and  other  institutions.  Let  us  use  it  in  making  the 
poor  less  poor,  and  not  in  making  the  rich  silver  owners 
richer.  We  may  not  blame  them  for  struggling  for  it,  but 
we  are  to  blame  if  we  give  it  to  them. 

No  free  coinage  bill  is  offered  or  asked  for  by  the  silver 
interest.  The  bill  passed  in  the  last  Senate  provided  that 
the  owners  of  silver  could  deposit  their  silver  in  the  United 
States  Mint  and  take  out  paper  money,  at  the  value  of  one 


16 


dollar  and  twenty-nine  cents  per  ounce  instead  of  eighty- 
three  cents  per  ounce,  the  certificates  redeemable  in  gold 
or  silver  coin.  During  the  year  past,  under  the  present  law, 
$49,961,184  was  paid  in  certificates  for  silver,  and  there  were 
surrendered  of  these  during  the  same  time  $47,745,173  for 
gold  coin  at  the  United  States  Treasury.  Under  the 
so-called  free  coinage  bill  the  United  States  Treasury  would 
have  paid  out  $76,756,817  instead  of  $49,961,184  for  the 
same  silver.  This  would  be  a  bonus  of  $29,795,633  to  the 
silver  owners  in  the  last  six  months  paid  by  the  dear 
people. 

THE  TRUE   SOLUTION,   OUR   CREDIT. 

The  true  solution  of  our  "  more  money  for  the  benefit  of  the 
people  "  question  is,  and  will  finally  be  found  to  be,  a  proper 
use  of  the  credit  power  of  the  sixty-six  millions  of  people  of 
these  United  States.  This  credit  is  as  good  as  gold  in  any 
State  in  the  Union,  or  at  any  bank  counter,  or  at  any  sheriff's 
office  or  tax  collector's  office,  or  at  any  counter,  or  transpor- 
tation office.  It  is  as  good  as  gold  in  any  foreign  nation.  Our 
credit  bonds,  which  are  the  naked  promise  of  the  sixty-six 
millions  of  people  to  pay,  are  as  good  as  gold,  for  the  owners 
of  gold  in  Europe  and  America  are  ready  at  any  moment  to 
exchange  gold  for  bonds.  Nay,  wonder  of  wonders,  with 
all  their  talk  about  the  "  great  gold  "  they  will  pay  a  pre- 
mium for  our  bonds.  Will  pay  one  hundred  and  seventeen 
dollars  in  gold  for  a  one  hundred  dollar  United  States  bond, 
unsecured,  payable  with  a  low  rate  of  interest  fifty  years  in 
the  future. 

Think  of  it !  Of  this  wonderful  credit.  Gold  financiers, 
cautious,  nervous,  far-seeing  gold  financiers,  actually  willing 
to  take  this  chance  for  fifty  years  in  the  future  on  the  credit 
of  this  nation.  Take  United  States  bonds  without  collateral 
security  on  the  naked  promise  of  the  Government  to  pay. 
Investing  hundreds  of  millions  of  gold  on  the  fiat  promise 
to  pay  fifty  years  hence.  In  fact,  millionaires,  it  is  rumored, 
are  forming  combined  corners  to  force  the  United  States  to 

14 


17 

issue  its  fiat  bonds,  or  promises  to  pay,  so  that  they  can  get 
rid  of  their  gold  at  one  hundred  and  seventeen  dollars  to 
one  hundred  dollars  for  these  bonds.  Good  as  gold?  Yes, 
better  than  gold,  is  the  credit  of  this  nation.  Why?  Because 
back  of  these  bonds,  back  of  the  fiat,  back  of  the  promises 
to  pay  are  the  honest  sixty-six  million  free,  prosperous  peo- 
ple, and  every  acre  of  land  in  the  United  States,  from  north 
to  south  and  from  east  to  west,  with  all  of  the  cities,  villages, 
farms,  workshops,  railroads,  and  improvements  thereon, 
including  all  of  our  gold  and  all  of  our  silver,  our  mines  and 
our  labor  and  our  future  produce.  No  nation  on  earth  has 
such  a  credit  record.  Our  war  bonds  and  greenbacks  issued 
in  war-times,  payable  in  coin,  which  was  honestly  and 
financially  understood  to  mean  whichever  coin  was  most 
valuable,  though  legally  payable  in  whatever  coin  was 
cheapest,  were  paid  by  this  nation  in  gold,  the  highest- 
priced  metal,  and  would  have  been  paid  in  silver  if  that 
metal  had  been  most  valuable.  We  as  a  nation  kept  finan- 
cial faith,  honor,  and  integrity  when  it  was  to  our  disad- 
vantage and  when  it  cost  us  millions  of  dollars,  and  we  have 
established  a  credit  among  nations  that  is  worth  more  mill- 
ions to  us  than  it  ever  cost,  provided  we  now  use  that  credit 
and  do  not  give  it  away.  We  have  paid  for  that  credit  in 
gold.  It  is  now  better  than  gold,  for  gold  may  fall  in  price, 
but  our  credit  will  not  fall.  Let  us  keep  it  there  and  say  to 
the  business  world  that  we  will  pay  our  credit  obligations 
in  whatever  metal  is  most  valuable,  the  credit  of  the  nation 
standing  good  for  the  commercial  difference  in  the  value 
of  the  article  used  for  money. 

Now  having  pictured  to  you  in  brief  outline  this  glorious 
world-wide  credit,  as  good  as  gold,  better  than  gold,  let  me 
show  you  how  this  credit  can  be  imbedded  unchangeable  in 
our  system  and  used  to  repay  ten-fold,  a  hundred-fold,  every 
dollar  it  has  cost,  and  how  it  will  not  only  give  us  the  vol- 
ume of  money  we  need,  but  will  make  us  the  banking  nation 
of  the  world.  It  can  be  ruined  by  allowing  schemers  to 
cast  a  cloud  upon  it  by  creating  the  impression  that  we  will 


18 

go  back  on  our  credit,  and  pay  our  debts  or  promises  in  the 
least  valuable  of  two  or  more  metals.  Or  it  can  be  impaired 
by  allowing  schemers  or  ignorance  to  so  innate  our  credit 
that  a  doubt  will  exist  as  to  our  ability  to  pay  all  of  our 
credit  promises,  however  good  our  intentions  may  be.  Pro- 
tect these  two  points  so  that  financiers  will  never  entertain 
a  doubt  upon  them,  and  our  credit  will  continue  as  good  or 
better  than  gold  so  long  as  the  nation  endures. 

WHAT   IS   THIS   CREDIT  MONEY? 

It  is  the  promise  of  sixty-six  millions  of  people,  having  an 
aggregate  wealth  of  $70,000,000,000,  with  the  power  of  tax- 
ation to  fulfill  the  promise,  as  against  the  promise  of  a  few 
individuals  liable  on  a  check,  draft,  or  State  bank  note.  It 
is  made  by  common  consent,  in  the  form  of  law,  a  legal  ten- 
der in  satisfaction  of  debt  among  all  people  in  the  jurisdic- 
tion of  this  nation,  and  the  nation  will  give  gold  to  any 
bearer  who  may  specially  demand  it ;  but  as  the  legal-ten- 
der paper  will  perform  every  function  of  money  within  this 
nation  that  gold  will,  no  citizen,  for  domestic  use  or  busi- 
ness affairs,  will  care  to  have  gold.  Only  those  who  must 
pay  a  foreign  debt  will  desire  to  surrender  paper  legal  ten- 
der and  call  for  gold  or  silver.  One  thing  is  certain,  that  the 
joint  promise  of  sixty-six  millions  of  people  on  a  legal-tender 
note  is  vastly  more  certain  to  be  fulfilled  on  demand  than 
the  promise  of  any  part  of  the  same  people  on  a  State  bank 
note  or  other  promise  to  pay.  But,  says  some  one,  if  after 
these  legal  tenders  are  issued  gold  should  be  exported,  how 
will  the  Government  get  gold  to  take  up  legal  tenders  pre- 
sented for  gold  ?  Just  as  any  man,  bank,  or  nation  would 
get  it  under  the  same  circumstances.  Buy  it.  There  is  no 
other  way.  The  nation  can  neither  make  gold  nor  steal 
it;  therefore  it  must  buy  it,  just  as  it  always  has  and 
always  must  do.  Issuing  interest-bearing  bonds  is  paying 
a  premium  for  gold.  Why  ?  Because  if  the  bond  bore  no 
interest  it  would  not  buy  gold,  but  adding  interest  makes 


19 

the  capital  invested  in  the  bond  productive,  and  it  then 
becomes  a  premium  on  gold.  It  is  just  as  well  to  buy  gold 
with  non-interest-bearing  legal  tenders  and  pay  a  premium 
as  to  pay  with  bonds  and  interest  as  a  premium.  The 
legal-tender  power  is  the  premium  paid  for  gold.  This  was 
recently  shown  when  the  Secretary  offered  New  York 
banks  bonds  as  collateral  for  gold.  The  banks  refused, 
because  the  bonds  could  not  be  used  for  money,  but  did 
exchange  gold  for  legal-tender  paper  money.  Using  legal- 
tender  paper  money  for  domestic  uses  would  free  some 
$300,000,000  of  gold,  or  more,  that  is  now  scattered  all  over 
the  United  States.  Such  a  volume  in  our  national  Treasury 
would  meet  every  demand. 

The  plan  of  buying  gold  or  silver  with  currency  and  pay- 
ing a  premium,  and  at  the  same  time  keeping  currency  on 
an  exchangeable  par  with  gold,  would  require  to  be  guarded 
by  allowing  the  United  States  Treasury  discretion  to 
•charge  a  premium  on  all  gold  or  silver  taken  from  the 
Treasury  for  export.  This  right  is  exercised  by  foreign 
nations  to  retain  their  gold  at  home.  Our  nation  should 
do  the  same.  Our  nation  should  also  retain  the  prior 
right  at  any  time  to  buy  at  its  market  value  for  full 
legal-tender  currency  any  of  the  gold  or  silver  taken  from 
the  mines  on  public  lands,  or  from  such  lands  hereafter 
sold  or  patented.  Possibly  the  better  solution  would  be  to 
stop  the  coinage  of  gold  and  silver  and  run  the  bullion 
into  five  hundred  dollar  ingots,  buying  and  selling  them  for 
legal-tender  currency  at  their  commercial  value. 

BUYING   GOLD   AND   SILVER   FOR   MONEY. 

All  gold  and  silver  is  private  property.  The  Govern- 
ment does  not  own  them.  It  can  not  appropriate  or  con- 
fiscate them.  It  must  go  into  the  market  and  buy.  This 
purchase  can  only  be  made  by  using  the  national  credit, 
that  is,  the  joint  or  common  credit  of  our  sixty-six  million 
people.  The  Government  can  not  buy  gold  or  silver  with 


gold  or  silver.  It  can  not  buy  with  merchandise  or  produce, 
for  the  Government  is  not  a  merchant  or  producer.  It  might 
make  all  or  a  part  of  the  taxes  payable  in  gold  or  silver 
coin ;  but  this  would  force  citizens  to  pay  a  premium,  thus 
shifting  the  general  burden  of  purchasing  from  the  sixty-six 
millions  of  people  upon  a  few.  There  is  therefore  no  just 
or  honest  way  by  which  the  Government  can  buy  gold  or 
silver  except  to  issue  bonds  or  legal-tender  paper  money. 
In  other  words,  the  credit  of  the  sixty-six  millions  of  people 
is  the  only  thing  that  can  be  used  to  buy  gold  or  silver  for 
money  use.  The  premium  on  gold  or  silver  in  exchange 
for  bonds  or  legal-tender  money  is  either  the  interest  on 
the  bonds  or  the  legal-tender  function  of  the  paper  money. 

WHY? 

Now  if  the  credit  of  the  Government  is  as  good  as  gold 
or  silver  for  domestic  money  use,  and  can  be  exchanged  for 
gold  or  silver  by  paying  interest  for  the  use  of  them,  why 
should  it  be  exchanged  at  all  ?  Why  pay  interest  to  use  it 
as  a  legal-tender  money  when  we  can  use  currency  without 
paying  interest  —  legal-tender  money  being  equally  good 
for  domestic  use  ?  During  our  present  financial  disasters 
the  banks  readily  exchange  gold  at  par  for  legal-tender 
paper  money,  proving  it  to  be  as  good  as  gold  for  domestic 
money  use.  Why  not,  therefore,  let  the  nation  issue  this 
legal-tender  paper  money  as  good  as  gold  in  sufficient  vol- 
ume to  transact  the  business  of  this  nation,  and  free  the 
gold  from  domestic  use  and  allow  it  to  meet  the  demand 
for  international  use  ?  If  a  necessity  arises,  at  occasional 
times,  to  have  gold  for  foreign  payments,  it  can  be  had  as 
well  by  discounting  non-interest-bearing  legal  tenders  as  by 
issuing  interest-bearing  bonds.  It  is  much  more  profitable 
to  the  people  to  occasionally  discount  a  non-interest-bear- 
ing legal-tender  note  than  to  issue  an  interest-bearing 
bond ;  for  a  three  per  cent  interest-bearing  bond  repre- 
sents an  annual  premium  of  three  per  cent  for  gold,  and 


21 

if  the  gold  is  held  as  a  reserve  we  continue  to  pay  interest 
on  the  bond  and  are  losing  interest  on  the  idle  gold, 
whereas  with  non-interest-bearing  legal  tenders  we  only 
pay  a  small  premium  occasionally  for  the  amount  of  gold 
or  silver  actually  needed  for  that  case.  As  a  matter  of  fact, 
generally,  we  would  not  pay  any  premium,  for  the  legal- 
tender  paper  will  perform  all  the  domestic  money  func- 
tions that  the  gold  will.  This  is  forcibly  shown  by  the 
fact  that  millions  of  gold  and  silver  annually  go  to  the 
United  States  mints  for  which  the  owners  prefer  to  take 
legal-tender  paper  money. 

The  enormous  cost  of  buying  gold  and  silver  with  inter- 
est-bearing bonds  is  shown  by  computing  the  interest  for  a 
century.  A  hundred  million  of  three  per  cent  bonds,  inter- 
est payable  semi-annually,  counting  interest  on  the  interest 
as  paid  in  and  reloaned,  will  double  every  twenty-four 
years.  The  account  will  so  stand  that  at  the  end  of  twenty- 
four  years  the  $  1 00,000,000  becomes  $200,000,000;  forty- 
eight  years  the  $100,000,000  becomes  $400,000,000 ;  seventy- 
two  years  the  $100,000,000  becomes  $800,000,000;  ninety-six 
years  the  $100,000,000  becomes  $1,600,000,000.  In  other 
words,  under  the  bond  system  of  buying  gold  for  money  use 
we  pay  $1,600,000,000  for  the  use  of  $100,000,000  for  ninety- 
.six  years,  whereas  by  occasionally  paying  a  small  premium 
for  gold  when  required  the  cost  would  be  vastly  less  per 
century  than  the  above. 

In  what  is  popularly  but  delusively  called  the  free  coin- 
age of  silver  a  premium  is  really  paid  by  the  people.  That 
premium  is  the  cost  of  free  coinage  and  stamping  the  legal 
tender  power  on  the  metal.  These  transactions  are  based 
on  the  common  business  rule  that  we  must  pay  in  some 
form  for  what  we  get.  We  must  exchange  value  for  value, 
unless  we  beg  or  steal.  The  gold  and  silver  bullion  is  the 
property  of  private  individuals.  The  legal-tender  function 
is  owned  by  the  people.  Neither  one  should  be  given  to 
the  other.  Each  should  sell  it  at  the  market  value.  The 
nation  should  therefore  clothe  its  dearly  bought  credit 


22 

with  a  legal-tender  money  function  in  the  form  of  a  non- 
interest-bearing  currency,  and  with  this  buy  gold  or  silver 
when  required,  at  its  market  value,  as  it  buys  lumber  or 
other  supplies,  and  then  use  it  as  it  deems  best,  either  for 
coinage,  or  resale  for  its  currency  notes,  or  for  a  reserve. 

For  domestic  purposes  we  have  no  need  for  gold  or  silver, 
except  for  subsidiary  coins.  No  one  wants  either  for  itself. 
People  only  want  them  because  they  believe  that  they  can 
get  rid  of  them  in  exchange  for  something  else.  Not  an 
individual  would  accept  gold  or  silver  if  he  were  forced  to 
keep  them  perpetually,  or  if  he  believed  that  he  could  not 
exchange  them  readily  for  other  things  for  the  value  at 
which  he  received  them,  or  use  them  to  pay  a  debt.  Here 
is  the  bedrock  trouble  with  silver  to-day.  People  do  not 
believe  that  they  can  get  rid  of  it,  or  exchange  it  for  other 
things,  and  therefore  their  unwillingness  to  receive  it.  If 
by  free  coinage  it  were  forced  on  the  people  of  the  United 
States  it  could  not  be  forced  on  the  people  of  the  foreign 
nations.  So  long  as  this  unwillingness  exists  in  the  minds 
of  men,  it  can  not  be  used  as  a  money  mechanism  of 
exchange  by  itself,  but  must  have  added  to  it  the  credit  of  the 
nation  to  make  up  any  deficiency  in  the  exchange  of  value. 
Therefore  the  credit  of  the  people,  as  good  as  gold,  stamped 
on  metal  or  paper,  backed  by  their  promise  to  mutually 
accept  it  at  par  as  a  medium  of  exchange,  is  the  essence  of 
the  transaction.  The  gold,  silver,  nickel,  or  paper  is  the 
material  body  on  which  the  exchange  value  and  power  are 
impressed,  and  the  common  contract  of  the  people  among 
themselves  to  use  it  is  the  vital  force. 


THE   PEOPLE  S   CREDIT  AS   MONEY. 

How  can  we  best  use  this  credit  of  the  nation  as  money  ? 
It  has  been  created  by  our  having  kept  faith  with  our  cred- 
itors. We  received  of  them  the  highest-priced  money  and 
agreed  to  pay  in  coin.  It  was  implied  in  the  contract  that 
it  was  to  be  repaid  in  the  highest-priced  money,  but  we 


23 

could  have  paid  it  in  the  cheapest  coin.  This  temptation 
was  publicly  presented  and  powerfully  advocated.  Every 
argument  and  statistic  that  talent  and  money  could  produce 
to  make  the  temptation  succeed  were  produced  and  scat- 
tered broadcast  over  the  land.  At  first  like  a  wave  the 
thought  swept  over  the  land  that  here  was  relief  for  the 
struggling  debtor,  and  popular  applause  greeted  the  offer; 
but  there  came  to  the  honest  masses  as  second  thought, 
was  it  right,  was  it  just,  was  that  the  agreement  and  the 
equitable  understanding.  The  farmer  reasoned  that  when 
he  bought  a  plow  or  farm  implement  that  it  was  understood 
that  it  was  to  be  a  good  article.  He  knew  that  when  he 
sold  grain  or  hay  to  be  delivered  that  it  was  understood  to 
be  good.  And  so  the  American  debtor  reasoned  out  that 
his  agreement  as  a  nation  was  to  pay  money  as  good  as  any 
other  money,  and  by  act  of  Congress  he  so  declared  his 
understanding  and  his  intention  to  pay  in  the  best  money, 
whether  it  was  gold,  silver,  or  paper.  The  temptation 
failed,  and  he  said,  "  Get  thee  behind  me,  Satan  ;  the  king- 
doms of  the  whole  world  are  not  worth  my  honor."  We 
Americans  have  placed  honor  above  life ;  we  have  freely 
given  life  on  ten  thousand  battle-fields  for  honor  and  right ; 
and  we  will  not  exchange  honor  and  right  for  the  profit  of 
paying  our  debts  with  inferior  money,  but  faith  and  honor 
shall  be  as  unsullied  as  the  starry  banner  that  typifies  the 
nation's  honor.  The  integrity  of  this  good  faith  and 
honesty  is  our  credit  capital,  and  we  must  preserve  it  so 
that  it  will  never  be  questioned  in  the  financial  world. 

What  is  the  most  stable,  sacred,  unchangeable  form  in 
which  we  can  affirm  our  credit  pledge  that  every  dollar 
issued  by  this  nation,  whether  gold,  silver,  or  paper,  shall 
ever  be  held  of  equal  value,  and  that  this  nation  will  always 
pay  its  debts  and  obligations  in  the  best  money  ?  The  con- 
fidence of  foreign  capital  in  us  has  recently  been  shaken  by 
the  agitation  to  pay  in  inferior  money,  and  as  a  result  mill- 
ions of  American  securities  have  been  rushed  in  upon  us. 
Nothing  but  the  most  sacred  and  abiding  form  of  assurance 


24 


can  meet  the  demand  and  restore  a  confidence  that  wil 
a  safe  foundation  for  the  use  of  our  credit. 


BY   A   CONSTITUTIONAL  AMENDMENT. 

This  is  our  best,  let  us  offer  nothing  less.  The  Constitu- 
tion of  the  United  States  is  the  highest,  safest,  and  most 
permanent  obligation  or  promise  that  the  Americans  can 
give.  It  is  not  only  a  declaration  accepted  by  Americans, 
but  by  the  nations  of  the  earth.  The  stability  of  its  decla- 
rations governs  the  laws  and  contracts  of  every  State  and 
every  man  in  the  States.  Counting  on  its  stability,  other 
nations  enact  laws  and  contracts  where  their  interests  come 
in  contact  with  ours.  We  have  no  higher  form  for  a  pledge 
of  faith  to  give,  either  at  home  or  abroad,  than  a  constitu- 
tional pledge.  The  confidence  of  this  world  in  our  constitu- 
tional guarantees  is  as  high  and  as  fixed  and  abiding  as  it 
is  in  the  stability  of  our  nation.  Therefore,  as  our  financial 
credit  rests  on  the  stability  of  our  promise  and  our  ability 
to  keep  all  of  our  money  upon  par  with  the  best  money,  we 
should  add  one  more  element  of  confidence  and  place  this 
promise  and  faith  of  the  nation  in  a  constitutional  amend- 
ment, where  it  will  abide  for  centuries  free  from  political 
legislation  or  judicial  disturbances,  where  as  a  chief  founda- 
tion-stone it  will  exist,  and  on  which  will  rest  our  financial 
credit,  and  on  which  will  be  reared  a  financial  system  that 
will  meet  the  growing  wants  of  this  nation  at  all  times. 
For  such  purposes  I  drafted  a  proposed  constitutional 
amendment  in  1 890.  It  was  introduced  in  both  Houses  of 
Congress  in  1892,  and  met  with  the  favorable  consideration 
of  many  of  our  ablest  men,  both  in  and  out  of  Congress. 
It  was  carefully  studied  by  Judge  Thomas  R.  Stockdale,  M. 
C.,  chairman  of  the  Sub-Judiciary  Committee  of  the  House 
of  Representatives,  to  whom  it  was  referred.  After  an 
exhaustive  study  of  the  subject  for  some  ten  months  as  a 
specialty,  he  made  one  of  the  ablest  reports  on  the  financial 
subject  that  has  been  presented  in  Congress  since  our 


25 

nation  was  formed,  showing  the  absolute  necessity  of  an 
amendment  such  as  the  one  proposed.  The  report  was  filed 
and  printed  March  3, 1893,  too  late  in  the  session  for  further 
action.  The  report  should  be  in  the  hands  of  every  Ameri- 
can and  should  be  studied  exhaustively.  Within  it  are 
embraced  the  financial  principles  that  will  permanently 
.solve  our  financial  problem. 

THE   PROPOSED   AMENDMENT. 

ARTICLE  XVI.  SECTION  i.  A  national  circulating  medium  shall  be 
issued  to  the  amount  of  twenty  dollars  per  capita,  as  shown  by  the  census 
of  1890,  and  by  each  succeeding  census,  for  the  proper  redemption  of  which, 
•when  required,  the  resources,  the  faith,  and  the  property  of  the  nation  are 
pledged  ;  for  which  redemption,  Congress,  by  a  two-thirds  vote  of  each 
House,  may  provide  for  the  collection  of  Government  revenues  and  taxes  in 
gold  and  silver  coin. 

SEC.  2.  Said  currency  with  gold  and  silver  coin  of  these  United  States, 
of  present  weight  and  fineness,  the  dollar  being  the  standard  or  unit  of 
values,  and  such  currency  notes  of  the  same  form  and  effect  as  may  be 
issued  in  lieu  of  gold  and  silver  coin,  or  bullion  held  exclusively  for  exchange 
for  currency,  shall  constitute  the  only  legal-tender  money  of  these  United 
States,  and  shall  be  received  at  par  in  satisfaction  of  all  obligations  for  the 
payment  of  money  within  the  jurisdiction  of  these  United  States.  Said 
gold  and  silver  coin  and  currency  shall  be  exchangeable  at  par  value. 

SEC.  3.  Congress  shall  have  power  to  enforce  this  article  by  appropriate 
legislation,  but  shall  not  have  power  to  increase  or  decrease  said  issue  ; 
provided  that  after  the  issue  of  1900  Congress  may,  by  two-thirds  vote 
of  each  House,  reduce  the  additional  issue  at  any  census. 

The  volume  of  credit  money  is  herein  named  at  twenty 
•dollars  per  capita  in  addition  to  gold  and  silver.  Some 
think  that  it  should  be  more,  some  less.  That  is  a  matter 
that  would  be  fixed  by  Congress  after  a  full  consideration. 
The  effect  of  this  amendment  is  to  make  and  forever  keep 
•our  gold,  silver,  and  paper  dollars  at  par  with  each  other. 
The  faith,  wealth,  and  credit  of  the  nation  are  thus  per- 
manently pledged  to  pay  whatever  difference  may  exist  in 
the  bullion  or  commercial  value  of  the  article  used  for 
money.  This  is  honest  and  just.  For  when  this  nation 
issues  a  gold,  silver,  or  paper  dollar  it  is  put  in  circulation 
at  par  with  the  highest  dollar  issued,  and  the  people  receive 


that  value  for  it,  and  they,  by  this  amendment,  stand  ready- 
to  make  that  value  always  good  to  the  holders  by  exchang- 
ing any  other  dollar  for  it.  Under  this  amendment  the 
Government  can  buy  such  gold  or  silver  as  it  deems  best  to 
hold  at  its  commercial  value,  and  the  difference  between 
that  commercial  value  and  the  money  value  is  for  the  benefit 
of  the  people,  and  when  the  nation  takes  up  or  redeems  its 
credit  obligations  in  gold  or  silver  it  should  be  by  return  of 
those  metals  at  their  commercial  value  at  the  date  of  ex- 
change, and  under  wise  rules  and  the  discretion  of  the 
Treasury  Department.  This  amendment  will  forever  pre- 
vent the  wild  inflation  of  our  credit  money,  which  has  been 
the  fatal  objection  to  the  currency  theories.  It  renders- 
impossible  the  financial  dangers  known  as  the  French 
Assignats,  John  Law,  Mississippi,  or  Argentine  Republic 
Cedula  schemes.  They  were  inflations  beyond  the  wealth 
of  the  promisors  to  pay. 

A  credit  issue  of  money  of  twenty  dollars  per  capita  rep- 
resents a  liability  of  less  than  two  cents  on  the  dollar  of  our 
national  wealth  of  seventy  billions  of  dollars  secured  by  a 
constitutional  amendment  which  is  practically  a  constitu- 
tional mortgage,  would  command  confidence  at  par  value  at 
home  and  abroad.  This  twenty  dollars  per  capita  would  take 
up  and  replace  all  forms  of  outstanding  currency,  giving  us  a 
uniform  issue  with  an  increase  of  about  twelve  dollars  per 
capita  above  our  present  unsecured  paper  money.  This 
would  be  in  addition  to  our  gold  and  silver  coin,  and  would 
also  be  in  addition  to  such  as  may  be  issued  for  gold  or 
silver  coin  or  bullion  held  for  general  redemption  or  ex- 
change. There  would  be  no  gold  or  silver  certificates.  All 
gold  and  silver  would  go  into  a  general  fund  for  exchange 
use  for  any  of  the  currency.  Our  money  would  thus  be  of  uni- 
form legal  effect,  and  every  dollar  held  by  any  one  would  be 
of  equal  use  and  value  with  any  other  in  any  part  of  the 
nation.  In  the  amendment  the  currency  issue,  in  addition 
to  the  gold  and  silver,  is  named  at  twenty  dollars  per  capita. 
This  is  a  suggested  sum,  and  before  passage  could  be  altered 


27 

to  any  better  amount.  My  own  judgment  is  that  twenty- 
five  or  thirty  dollars  would  be  better,  for  the  reason  that 
the  export  of  gold  might  otherwise  deplete  our  volume  and 
cramp  our  home  money  market.  However,  I  believe  that 
the  currency  issued  under  this  amendment  would  command 
such  confidence  and  be  so  efficient  in  its  work  that  it  would 
go  abroad  to  some  extent  in  place  of  gold,  and  if  our  volume 
were  sufficient  we  would  become  the  banking  nation  of  the 
world.  With  our  vast  resources  and  stable  form  of  govern- 
ment, and  each  man  owning  or  using  money  having  a 
financial  interest  in  the  stability  of  the  Government,  our 
currency  would  certainly  have  a  maximum  value  and  use. 
Under  the  third  section  of  the  amendment  the  volume  is 
increased  every  census  to  correspond  with  the  increase  of 
population.  And  if  it  were  found  by  experience  that  the 
volume  were  increasing  too  rapidly,  it  is  provided  that  Con- 
gress, by  a  two-thirds  vote  of  each  House,  may  reduce  the 
issue  for  that  census.  Such  a  discretionary  power  must 
rest  somewhere,  and  restricted  as  in  this  case  it  would  be 
very  safe. 

AS   GOOD   AS   GOLD. 

The  gold  in  a  dollar  (twenty-three  and  twenty-two  hun- 
dredths  grains)  is  supposed  to  require  a  dollar's  worth  of 
labor,  on  the  average,  to  mine  it,  and  therefore  it  is  said  to- 
represent  that  value.  A  currency  note,  when  printed  and 
deposited  in  the  United  States  Treasury,  like  the  gold  in 
the  mine,  represents  no  value,  but  when  some  one  gives 
to  the  people,  the  Government,  a  dollar's  worth  of  labor 
or  material,  and  receives  a  paper  dollar,  thereafter  it  rep- 
resents a  dollar's  worth  of  labor  as  truly  as  does  twenty- 
three  and  twenty-two  hundredths  grains  of  gold  after  min- 
ing. The  only  difference  is  that  the  labor  is  put  forth  for 
the  gold  before  it  is  minted  into  money,  while  the  paper 
dollar  is  minted,  before  the  labor  is  put  forth  for  it.  Each 
represents  the  same  amount  of  labor. 


SYSTEM    OF  CIRCULATION. 

How  shall  this  volume  of  money  be  put  in  circulation  ? 
My  reply  is,  that  it  does  not  need  to  be  forced  into  circula- 
tion. Whatever  amount  the  business  of  the  nation  calls  out 
will  pass  into  circulation.  Let  the  balance  remain  idle  in  the 
United  States  Treasury  as  a  reserve.  It  costs  no  interest 
while  lying  idle,  as  it  is  the  joint  credit  of  the  sixty-six  million 
people.  Secondly,  when  any  one  gives  the  Government 
labor  or  material  it  will  take  out  a  corresponding  amount 
of  currency.  Under  this  branch  let  the  Government  pay 
for  its  river,  harbor,  and  coast  defenses,  its  naval  construc- 
tions, its  public  buildings  and  improvements.  This  would 
save  taxing  the  people  millions  of  dollars  annually,  and  would 
aid  every  oppressed  mortgaged  taxpayer  to  apply  his  part 
of  the  saved  tax  to  pay  off  his  mortgage.  It  would  give 
employment  to  hundreds  of  thousands  of  now  idle  laborers, 
not  only  on  Government  works,  but  in  all  private  industries 
that  have  to  furnish  material  and  machinery  to  the  Govern- 
ment and  to  those  who  produce  the  raw  material  for  the 
manufacturers,  and  finally  gives  employment  to  the  farming 
element  in  producing  food  and  clothing  for  the  vast  multi- 
tude of  laborers  above  referred  to.  The  labor  problem 
would  be  largely  solved  by  the  increase  in  the  volume  of 
money.  While  this  volume  of  money  was  being  put  in  cir- 
culation by  the  above  methods,  the  tax-paying  citizens 
would  have  immediate  relief,  and  all  laboring  classes  would 
relieve  their  now  critical  wants  by  receiving  employment. 
Of  course  the  above  expenditures  would  be  made  under  the 
best  judgment  and  discretion  of  Congress  and  the  depart- 
ments. If  so  done,  very  wise,  desirable,  and  beneficial 
results  would  be  quickly  realized.  You  will  readily  trace 
out  innumerable  benefits  to  the  whole  community  by  this 
method  of  placing  the  money  in  circulation  on  the  basis  of 
a  dollar's  worth  of  labor  or  material  for  each  currency 
dollar. 


29 

COMMERCIAL   CHANNELS. 

The  other  means  of  placing  the  newly  issued  currency  in 
circulation  is  through  business  or  commercial  channels. 
This  will  require  a  carefully  adjusted  system,  which  should 
utilize  as  many  existing  appliances  as  can  be  judiciously 
used,  and  should  have  added  such  other  appliances  as  will 
produce  the  best  results.  Of  course  this  would  have  to  be 
under  the  supervision  of  the  nation  for  general  safety,  but 
could  be  best  executed  in  detail  by  private  responsibility. 
The  object  of  the  sub-treasury  plan  to  furnish  money  to 
citizens  is  good  as  far  as  it  goes,  but  is  objectionable  in 
being-  limited  to  a  few,  and  because  it  is  class  legislation. 
The  machinery  proposed  with  which  to  accomplish  the  results 
might  be  taken  advantage  of  by  unscrupulous  persons,  and 
might  result  in  as  much  damage  as  good.  A  well-adjusted 
banking  system  embracing  all  the  benefits  of  our  present 
system,  and  adding  others,  would  be  the  best  of  all ;  an  out- 
line of  which  I  will  proceed  to  give.  The  nation  alone 
should  issue  money,  and  it  alone  should  be  responsible  for 
its  redemption  and  exchange.  This  would  relieve  all  banks 
from  responsibility  for  the  circulation,  and  would  never  be 
the  occasion  of  a  run  on  the  banks.  If  the  banks  of  the 
United  States  were  to-day  operating  under  the  old  State 
bank  law,  and  each  had  in  circulation  its  own  notes  and  was 
carrying  the  double  load  of  indebtedness  to  depositors  and 
note-holders,  nothing  could  prevent  a  run  on  every  bank  in 
the  United  States  and  force  an  immediate  suspension.  This 
was  the  cause  of  the  general  suspension  of  banks  in 
1838,  1857,  1868.  In  1839  the  bank-note  circulation  was 
$149,185,800;  the  legal-tender  money  was  $27,031,476;  the 
excess  of  bank  notes  was  $122,154,324.  The  banks  had  a 
double  debt,  one  to  note-holders  and  another  to  depositors. 
When  the  depositors  began  to  withdraw,  the  note-holders 
rushed  in,  and  the  demands  from  the  two  quickly  closed  every 
bank  in  the  United  States.  In  1857  the  deposits  in  the 
banks  were  $120,764,757;  State  bank  notes,  $83,312,269;  total 


30 


liability,  $204,077,026.  Specie  held  (the  only  legal  tender), 
$12,970,493.  Excess  of  liabilities,  $191,106,533.  At  the 
same  time  there  was  due  to  the  banks  on  loans  and  dis- 
counts $320,252,890,  leaving  an  excess  of  assets  over  liabili- 
ties of  $129,046,363.  Notwithstanding  their  solvency  the 
combined  run  of  depositors  and  note-holders  again  closed 
every  bank  in  the  nation. 

State  bank  notes  are  not  a  legal  tender,  are  not  money ; 
they  are  only  the  promissory  note  of  the  bank  payable  to 
the  bearer  without  interest  on  demand.  They  are  outstand- 
ing certificates  of  deposit.  Assets  and  securities  back  of 
them  are  useless  in  a  panic.  Assets  and  securities  are  not 
money,  and  can  not  be  paid  either  to  note-holders  or  deposit- 
ors. State  bank  notes,  payable  to  bearer  on  demand,  in 
legal-tender  money,  by  the  bank,  cause  a  double  liability 
without  any  means  of  meeting  it,  and  will  periodically  close 
every  bank  in  the  system  using  them.  The  only  thing  that 
has  prevented  the  general  suspension  of  banks  in  the  sev- 
eral panics  since  1861  is  the  fact  that  there  were  no  bank 
notes  in  circulation  to  be  redeemed.  The  banks  had  only  to 
take  care  of  depositors.  The  weak  spot  in  all  credit  obliga- 
tions used  in  the  banking  system  as  money  is,  that  they  are 
deposited  over  and  over  again,  and  the  banks  give  the 
depositors  credit  on  their  books,  to  be  repaid  in  legal-tender 
money.  And  when  depositors  in  large  numbers  call  for 
legal-tender  money,  the  State  bank  notes  or  other  credit 
obligations  are  rejected  by  the  depositors.  Therefore  it 
may  be  laid  down  as  an  inexorable  and  infallible  law  of 
finance,  that  no  form  of  credit  obligation,  and  no  amount 
of  solvent  assets,  can  take  the  place  or  perform  the  functions 
of  legal-tender  money  in  final  payment,  and  that  the  volume 
of  legal-tender  money  must  be  sufficient  to  avoid  the  neces- 
sity of  using  too  much  personal  credit  obligation. 

The  object  lessons  of  the  present  year  should  teach 
our  people  that  assets,  however  good,  or  checks,  drafts, 
State  bank  notes,  or  any  other  credit  obligations,  can  not 
take  the  place  of  a  safe  volume  of  legal-tender  money.  The 


31 

fact  that  ninety-five  per  cent  of  our  business  was  transacted 
by  checks  and  credit  obligations,  demonstrates,  in  view  of 
the  failures  of  the  last  two  years,  that  we  must  have  more 
legal-tender  money  and  less  of  the  ninety-five  per  cent  per- 
sonal credit  checks.  The  nation,  therefore,  issuing  the  vol- 
ume of  legal-tender  money  must  have  some  safe,  practical 
method  by  which  it  can  furnish  a  circulating  medium  to  the 
banks,  holding  the  banks  in  some  way  responsible,  as  Govern- 
ment agents,  to  the  people  for  the  use  of  money.  The  sub- 
treasury  plan  has  an  imperfect  form  of  this  principle.  If  the 
large  volume  of  this  issue  lying  in  the  United  States  Treas- 
ury were  used  as  a  reserve  available  to  the  banks,  under 
safely  guaranteed  requirements,  and  upon  depositing  in  the 
United  States  Treasury  absolutely  good  securities,  charging 
the  banks  such  a  rate  of  interest  as  would  prevent  the 
undue  use  of  money,  it  would  give  flexibility  in  our  volume 
for  our  actual  use.  The  rate  of  interest  could  be  fixed  on 
an  increasing  scale  on  each  successive  amount  drawn  by  a 
bank.  This  rate  could  run  rapidly  up  from  one  per  cent  on 
the  first  $100,000  to  ten  per  cent  on  all  over  $500,000  or 
$1,000,000.  This  is  the  common  method  adopted  by  banks 
to  check  speculation  or  to  prevent  an  individual  customer 
from  borrowing  too  heavily.  It  runs  the  rate  of  interest  up 
to  a  point  where  it  does  not  pay  to  borrow  the  money.  The 
same  principle  applied  by  the  Government  against  the 
banks  would  check  all  undue  speculations  or  use  of  money. 
When  the  banks  did  not  need  the  money  for  the  use  of 
their  customers,  they  could  return  it  to  the  United  States 
Treasury  and  stop  interest. 

WHAT   SECURITIES. 

Certain  bonds  of  States,  counties,  and  cities  could  be 
used  with  perfect  safety  with  some  additional  legislation. 
Restrict  their  use  to  a  class  where  the  total  bonded  indebt- 
edness did  not  exceed  five  or  ten  per  cent  of  the  averaged 
assessed  value  of  the  real  property  in  the  State,  county,  or 


32 

city  for  the  preceding  five  years,  deducting  any  outstand- 
ing bonds.  Also  providing  that  after  the  public  issuance 
and  sale  of  the  bonds,  and  payment  therefor  to  the  State, 
county,  or  city  treasury,  that  all  contest  as  to  the  validity  of 
the  bonds  shall  be  forever  barred,  compelling  all  such  con- 
tests to  be  made  prior  to  the  public  sale  of  the  bonds. 
Provide  also  that  if  the  State,  county,  or  city  officers  did  not 
levy  and  collect  the  tax  to  meet  the  payment  of  interest 
and  principal,  that  the  Secretary  of  the  Treasury  could 
appoint  a  proper  officer,  under  proper  bonds,  to  at  once 
levy  and  collect  such  a  tax.  These  provisions  would  give  a 
bond  as  good  as  any  United  States  bond  ever  issued,  and 
one  that  never  could  be  repudiated  or  the  payment  thereof 
avoided.  Such  bonds  would  bear  a  rate  of  interest  as  low 
as  two  per  cent,  thus  saving  taxpayers  a  large  amount.  In 
such  bonds  banks  could  safely  invest  a  portion  of  their  cap- 
ital or  of  their  depositors'  money,  for  at  any  time,  by  deposit- 
ing these  bonds  with  the  United  States  Treasurer,  the  bank 
could  obtain  legal-tender  money  to  repay  depositors  or  to 
loan  to  customers.  I  do  not  see  how  a  safer  or  more  con- 
venient form  of  circulation  could  be  devised.  The  solvency 
and  safety  of  the  banks  in  the  system  would  appear  by  the 
following  form  of  a  statement,  using  for  illustration  the 
last  figures  of  the  Comptroller's  report: 

Bank  capital  paid  up $    686,573,015 

Deposits  (total) 2,327,081 ,452 

Surplus  and  profits ._      342,503,926 

Total ---$3,356,158,393 

Invested  in  bonds  of  States,  etc.,  deposited  with 

United  States  Treasurer  for  re-loan,  say _  i  ,000,000,000 

Loans  on  real  estate 300,000,000 

Commercial  loans 1,500,000,000 

Bank  premises _  75,000,000 

Cash  on  hand 481,158,393 


Total $3,356,158,393 

This  gives  an  interest-bearing  aggregate  of  $2,800,000,000 
as  against  present  total  loans  and  discounts  of  $2,153,498,- 


15 


33 

829.  It  also  gives  legal-tender  cash  on  hand,  $481,158,393, 
as  against  a  present  cash  on  hand  of  $313,384,824. 

To  meet  a  depositors'  run  the  present  system  gives :  Cash, 
$313,384,324;  United  States  certificates  and  redemption 
fund,  $22,241,543;  total,  $335,625,867  with  which  to  meet 
$2,327,081,452  of  deposits.  In  addition  to  this  there  could 
be  added  the  uncertain  amount  that  banks  call  in  on  loans, 
but  whatever  was  called  in  by  one  bank  would  have  to  be 
called  out  of  some  other  bank  and  would  not  increase  the 
above  aggregate,  neither  could  it  help  the  general  situation. 
Under  the  new  plan  the  resources  with  which  to  meet  a 
depositors'  run  would  be :  Cash,  $48 1 , 1 58,393 ;  bonds  in  United 
States  Treasury  on  which  legal  tenders  would  issue,  $1,000,- 
000,000;  total,  $1,481,158,393.  In  other  words,  there  would 
be  this  vast  sum  available  on  hand  to  meet  depositors' 
claims  of  $3,237,081,452,  instead  of  the  present  small  sum  of 
$335,625,867.  Such  a  financial  system  could  never  be 
shaken.  No  panic  could  ever  reach  it.  Runs  would  only 
affect  local  cases  of  individual  banks,  where  gross  misman- 
agement or  intentional  dishonesty  had  destroyed  its  assets. 
vSuch  a  system  would  obviate  the  necessity  of  banks  calling 
in  loans  to  meet  depositors'  checks,  which,  if  carried  to  any 
extent,  cramps  and  crushes  the  borrower.  The  replenish- 
ing would  be  from  the  reserve  loan  fund  in  the  United 
States  Treasury  to  meet  the  temporary  demand,  to  be 
returned  to  the  Treasury  when  repaid  to  the  bank  by  the 
customer.  No  system  of  private  banking  can  withstand  or 
meet  the  colossal  demands  of  this  age. 

In  ordinary  times  and  for  local  cases,  the  banks  rediscount 
with  each  other  and  fully  meet  the  want,  but  when  the 
money  shortage  is  general  all  over  the  nation  banks 
can  not  sufficiently  rediscount  with  each  other.  Here  is 
where  the  financial  army  is  doubled  up,  its  ranks  broken 
and  thrown  into  confusion,  followed  by  panic  and  disaster. 
There  is  now  no  system  of  reserve  for  this  point.  One 
must  be  provided,  ample  and  available,  to  reach  any  weak 
point  in  the  financial  line  promptly.  The  entire  reserve 


84 


power  of  our  sixty-six  millions  of  people  for  every  subject  and 
emergency  is  in  the  Government,  and  should  be  used  when 
required.  Banks  generally  have  bonds  of  States,  counties, 
and  cities  that  are  not  yet  due.  These  will  be  paid,  princi- 
pal and  interest,  when  due,  but  the  bank  can  not  in  the 
emergency  wait.  Neither  will  the  depositors.  Other  banks 
would  purchase  or  rediscount  these  securities,  but  can  not 
for  want  of  funds  and  from  fear  of  running  short  on  cash. 
They  are  merchantable  securities  in  any  place  where  there 
is  idle  money.  The  reserve  or  money  power  of  sixty-six 
millions  of 'people  as  represented  in  our  national  credit 
vested  in  a  national  issue  of  legal-tender  credit  money  is 
the  only  resource  we  have  in  such  an  emergency.  It  is 
ample  and  practicable  and  should  by  act  of  Congress  be  put 
in  a  position  where  it  can  be  utilized.  This  power  is  the 
joint  credit  of  sixty-six  millions  of  people.  They  own  it, 
and  when  they  need  it,  what  folly,  what  inexcusable  folly  or 
^rime  against  society  not  to  use  it !  We  paid  a  great  price 
for  it,  and  if  never  utilized  it  is  a  total  loss. 


BANKS    SHOULD    RECIPROCATE. 

In  return  for  the  benefits  of  this  system  the  banks  should 
reciprocate,  and  aid  the  United  States  Treasury  when 
required.  Upon  the  order  of  the  Treasury,  approved  by 
the  President,  they  should  furnish  a  percentage  of  the 
gold  or  silver  held  by  them  in  exchange  for  currency  for 
public  use.  They  should  also  be  subject  to  such  other 
duties  toward  the  Government  as  can  be  best  performed  by 
them. 

OUR    MINES    OF    GOLD    AND    SILVER. 

These  also  should  reciprocate.  It  is  worthy  of  considera- 
tion whether  Congress  should  not  pass  an  act  giving  the 
Government  the  prior  right  to  buy  with  currency  any  or  all 
gold  or  silver  taken  from  mines  on  the  public  lands  or  from 
mines  hereafter  sold  or  patented. 


35 

Why  should  other  nations  be  allowed  to  mine  and  export 
a  product  of  so  much  importance,  and  our  nation  stand  by 
helpless  and  stupified  ?  Not  only  should  this  prior  right  to 
purchase  at  a  market  value  exist,  to  be  exercised  for  the 
public  good,  but  there  should  exist  a  discretionary  right  in 
the  executive  department  to  charge  a  tax,  or  commission, 
or  premiun,  on  gold  or  silver  taken  from  the  United  States 
Treasury  for  export.  This  right  is  exercised  by  the  Bank 
of  England  and  in  France  and  Germany.  Why  should  we 
not  place  the  same  self-protecting  power  in  the  hands  of 
our  officers  ? 

The  essential  elements  of  a  safe  monetary  system  for 
the  United  States  therefore  are :  First,  an  international 
clearing-house  system  to  lessen  the  actual  handling  of 
gold  in  settling  the  international  balances  among  mer- 
chants. Second,  the  issuing  by  the  United  States  of  *a  suffi- 
cient volume  of  legal-tender  currency,  interchangeable  with 
gold  and  silver,  based  on  the  wealth  of  the  nation,  and 
publicly  guaranteed  by  a  constitutional  amendment,  so  as 
to  create  absolute  confidence  in  our  currency.  Third,  a 
banking  system  with  a  proper  amount  of  its  funds  invested 
in  the  bonds  of  States,  counties,  and  cities  that  could  be  de- 
posited in  the  United  States  Treasury,  on  which  money  could 
be  drawn  by  the  banks  to  make  loans  or  pay  depositors. 
Under  such  a  system  all  idle  money  from  all  parts  of  the 
United  States  would  be  by  the  banks  returned  to  the 
United  States  Treasury  to  avoid  paying  interest  thereon, 
thus  keeping  the  idle  money  in  its  full  strength  at  the 
reserve  point  ready  to  go  at  a  moment's  call  to  any  point 
in  the  whole  system. 

BANK   PROFITS. 

The  profit  to  a  bank  is  not  so  much  in  a  high  rate  of 
interest  as  it  is  in  the  volume  of  business.  Small  profit 
on  the  individual,  quick  sales,  and  a  large  business  is  the 
rule  of  success,  of  live  and  let  live,  in  banking  and  in  all 
other  business.  A  large  volume  of  money  will  prevent 


more  failures  than  a  small  volume.  A  large  volume  of 
money  will  create,  develop,  and  sustain  a  larger  volume  of 
business  than  a  smaller  volume  would.  A  large  volume  of 
money  will  give  employment  to  more  laborers  than  a  small 
volume.  But  volume  will  not  prevent  failures  by  stealing 
or  bad  business  acts.  Failures  generally  occur  for  want 
of  money.  The  man  failing  seldom  has  a  drug  of  money 
at  his  command.  Values  and  securities  are  generally 
much  more  stable  in  the  pressure  of  plenty  of  money  than 
when  it  is  scarce.  Values  and  securities  advance  under 
the  influence  of  either  abundance  of  credit  or  abundance 
of  money.  But  when  the  advance  is  based  on  credit  the 
day  must  come  when  credit  must  be  liquidated  with  money, 
and  when  not  forthcoming  a  shrinkage  of  values  occurs, 
bringing  in  its  train  all  the  calamities  of  a  financial  crisis. 
Business  must  then  be  killed  off  until  it  is  within  the  com- 
pass of  the  volume  of  money,  and  then  start  to  grow  on 
credit  again,  and  again  be  killed  off.  When  the  advance 
of  values  and  securities  is  based  on  a  sufficient  volume  of 
money  they  must  remain  stable.  There  is  no  room  for 
shrinkage  except  upon  the  basis  of  non-productive  or  perish- 
able commodities,  and  this  is  common  to  all  financial  condi- 
tions. The  beneficial  effect  of  the  volume  of  money  reaches 
a  limit  when  it  causes  labor  to  produce  more  than  the  human 
race  can  consume.  But  surplus  products  can  largely  find  a 
market  in  some  part  of  this  big  world.  The  starving 
millions  of  Europe  can  eat  up  all  of  our  surplus  food.  The 
volume  of  money  gives  no  illegal  advantage  to  one  person  or 
set  of  persons  against  others  as  to  price.  A  large  volume 
of  money  would  advance  pro  rata  all  prices  and  labor. 
Thus,  where  the  farmer  got  an  advance  for  his  products  he 
would  in  turn  pay  an  advance  for  all  products  he  would 
consume,  and  so  of  all  others.  This  must  be  so.  For  if  it 
gave  the  farmer  a  perpetual  advantage  over  all  others  it 
would  only  be  a  question  of  years  until  the  farmers  would 
be  the  billionaires/and,  in  fact,  in  time  would  own  the  whole 
world  and  all  its  contents.  A  small  volume  of  money 


37 

enables  the  owners  of  it  to  charge  for  its  use  more  than 
the  averaged  profit  on  the  industries  of  the  country. 
Here  again  it  is  only  a  question  of  years  until  that  excess 
of  interest-rate  above  profit-rate  shall  eat  up  the  industry, 
close  it  up,  and  transfer  it  as  a  dead  property  to  the  money- 
owners.  This  continued,  wrecks  the  country  and  leaves  the 
money-owner  losses  that  more  than  offset  all  of  his  unjust 
excess  of  profits.  The  volume  of  money  must  be  such 
that  the  averaged  rate  of  interest  shall  be  less  than  the 
averaged  rate  of  profits  on  the  industries  of  the  people. 
On  no  other  basis  can  the  industries  of  the  people  prosper. 
This  rate  of  interest  can  only  be  attained  and  retained  by 
increasing  the  volume  of  money  to  the  proper  limit.  And 
that  limit  will  be  discovered  when  the  rate  of  interest  is 
reached  and  permanently  retained  all  over  the  nation  and 
all  over  the  world.  If  our  volume  of  money  were  trebled, 
deposits  would  treble.  There  would  be  three  times  as  much 
money  to  loan.  At  a  ruling  rate  of  three  per  cent  three  times 
the  number  of  persons  could  borrow  with  profit  to  their 
business.  Banks,  therefore,  from  this  increased  amount  of 
loans  would  realize  per  year  the  equal  of  nine  per  cent  on 
the  present  volume  of  loans.  But  in  one  case  it  is  collected 
from  three  customers,  where  in  the  latter  it  is  collected 
from  one.  There  would  thus  arise  stability  all  along  the 
financial  line,  and  as  much  or  more  profit  to  the  banks  and 
less  losses.  If  from  the  bank  profits  since  1873  were 
deducted  all  the  losses  banks  have  sustained  by  failure  of 
customers  and  shrinkage  of  securities,  it  would  leave  a  net 
rate  of  interest  not  to  exceed  three  or  four  per  cent. 

To  show  how  the  principles  referred  to  in  this  address 
would  practically  work  out  when  embodied  in  an  act  of 
Congress,  I  have  carefully  prepared  a  bill,  taking  the  general 
act  of  Congress  of  June,  1864,  as  the  frame-work  and  mak- 
ing as  few  changes  or  additions  as  possible.  It  is  hereto 
attached  for  the  inspection  of  those  desiring  to  study  it. 
The  words  in  italics  show  the  suggested  changes  made  in 
the  present  law. 


38 

In  view  of  the  financial  emergency  that  rests  not  only 
upon  this  nation,  but  upon  all  the  nations,  I  would  suggest 
that  this  Congress  express  its  judgment  in  the  form  of  reso- 
lutions on  the  necessity  of  Congress  acting  in  the  premises, 
and  enacting  a  law  whereby  the  gold  can  be  more  freely 
used  for  international  purposes,  and  that  for  our  domestic 
use  the  credit  of  the  nation,  declared  in  a  constitutional 
amendment  and  based  on  the  wealth  and  resources  of  the 
nation  to  a  safely  limited  extent,  should  be  used  in  the  form 
of  a  legal-tender  money.  As  soon  as  it  became  known  that 
Congress  would  take  such  action  confidence  would  be 
restored,  and  we  would  enter  upon  an  era  of  permanent 
prosperity  such  as  we  have  never  seen,  a  prosperity  that 
would  be  shared  in  by  every  other  nation. 


PROPOSED  ACT  OF  CONGRESS. 

This  bill  is  known  as  Senate  Bill  2,947,  and  House  Bill 
8,311,  Fifty-second  Congress,  first  session.  The  parts  in 
italics  show  where  this  bill  differs  from  the  currency  act  of 
June  3,  1864. 

A  BILL  TO  PROVIDE  A  NATIONAL  CIRCULATING  MEDIUM  AND  TO  PROVIDE  FOR 
THE  CIRCULATION  THEREOF. 

,  SECTION  i.  That  there  shall  be  established  in  the  Treasury  Department 
a  separate  Bureau,  which  shall  be  charged  with  the  execution  of  this  and 
all  other  laws  that  may  be  passed  by  Congress  respecting  the  issue  and 
circulation  of  a  National  circulating  medium.  The  chief  officer  of  said1 
Bureau  shall  be  denominated  the  Comptroller  of  Finance,  and  shall  be  under 
the  general  direction  of  the  Secretary  of  the  Treasury.  He  shall  be 
appointed  by  the  President  of  the  United  States,  with  the  approval  of  the 
Secretary  of  the  Treasury,  by  and  with  the  consent  of  Congress,  and  shall 
hold  his  office  for  the  term  of  ten  years  unless  sooner  removed  by  the  Presi- 
dent with  the  consent  of  Congress.  He  shall  receive  an  annual  salary  of 
eight  thousand  dollars;  he  shall  have  a  competent  deputy  appointed  by  the 
Secretary,  whose  salary  shall  be  four  thousand  dollars  per  year,  who  shall 
possess  the  power  and  perform  the  duties  of  the  Comptroller  during  a 
vacancy  in  said  office  or  during  the  absence  or  inability  of  the  Comptroller. 
The  Comptroller  shall  employ,  from  time  to  time,  the  necessary  clerks  to 
discharge  such  duties  as  he  shall  direct.  Such  clerks  shall  be  appointed 
and  classified  by  the  Secretary,  and  be  subject  to  the  direction  of  the  Secre- 


39 

tary  of  the  Treasury,  which  clerks  shall  be  classified  in  the  manner  now  pre- 
scribed by  law.  Within  fifteen  days  after  notice  of  his  appointment  he  shall 
take  and  subscribe  the  oath  of  office  prescribed  by  the  Constitution  and  the 
laws  of  the  United  States,  and  shall  give  to  the  United  States  a  bond  in  the 
penal  sum  of  one  hundred  thousand  dollars,  with  not  less  than  four  respon- 
sible sureties,  to  be  approved  by  the  Secretary  of  the  Treasury,  conditional 
for  the  faithful  discharge  of  the  duties  of  his  office.  The  Deputy  Comp- 
troller shall  also  take  oath  of  office,  and  give  a  similar  bond  in  the  sum  of 
fifty  thousand  dollars.  The  Comptroller  or  Deputy  Comptroller  shall  not, 
either  directly  or  indirectly,  be  interested  in  any  association  doing  a  banking 
business  under  this  act. 

SEC.  2.  That  the  Comptroller  of  Finance,  with  the  approval  of  the 
Secretary  of  the  Treasury,  shall  devise  a  seal,  with  suitable  inscription,  for 
his  office,  a  description  of  which,  with  the  certificate  of  approval  by  the 
Secretary  of  the  Treasury,  shall  be  filed  in  the  office  of  the  Secretary  of 
State,  with  an  impression  thereof,  which  shall  thereupon  become  the  seal  of 
office  of  the  Comptroller  of  Finance,  and  the  same  may  be  renewed  when 
necessary.  Every  document  executed  by  the  Comptroller,  in  pursuance  of 
any  authority  conferred  on  him  by  law,  and  sealed  with  his  seal  of  office, 
shall  be  received  in  evidence  in  all  places  and  courts  whatsoever;  and  all 
copies  of  papers  in  the  office  of  the  Comptroller,  certified  by  him  to  be 
correct  copies  of  the  originals  in  his  office,  shall  in  all  cases  be  evidence 
equally  and  in  like  manner  as  the  originals.  An  impression  of  such  r,eal 
directly  on  the  paper  shall  be  as  valid  as  if  made  on  wax  or  wafer. 

SEC.  3.  That  there  shall  be  assigned  to  the  Comptroller  of  Finance,  by 
the  Secretary  of  the  Treasury,  suitable  rooms  in  the  Treasury  Building  for 
conducting  the  business  of  the  Bureau  of  Finance,  and  shall  provide  safe 
and  secure  fire-proof  and  burglar-proof  vaults  in  which  it  shall  be  the  duty 
of  the  Comptroller  to  deposit  for  safe-keeping  all  plates  not  necessarily  in 
the  possession  of  engravers  and  printers,  and  other  valuable  things  belong- 
ing to  his  department;  and  the  Secretary  shall  from  time  to  time  furnish 
the  necessary  furniture,  stationery,  fuel,  light,  and  other  proper  conveniences 
for  the  transaction  of  said  business. 

SEC.  4.  That  the  Comptroller  of  Finance,  under  the  direction  of  the 
Secretary  of  the  Treasury,  is  hereby  authorized  and  directed  to  issue 
currency  notes  in  the  name  of  the  United  States  of  America  to  the  amount 
of  twenty  dollars  per  capita  of  the  population  of  the  census  of  1890,  in 
addition  to  gold  and  silver  coin.  Upon  ascertaining  each  following 
census  the  issue  shall  be  increased  to  said  twenty  dollars  per  capita.  In 
addition  thereto  he  shall  issue  such  additional  currency  notes  of  the 
same  form  and  effect  in  lieu  of  gold  or  silver  coin  of  the  United  States t 
or  bullion  deposited  or  held  exclusively  for  exchange  for  currency  notes 
as  may  be  provided  by  law.  In  order  to  furnish  suitable  notes  for  circula- 
tion the  Comptroller  of  Finance  is  hereby  authorized  and  required,  under 
the  direction  of  the  Secretary  of  the  Treasury,  to  cause  plates  and  dies  to 
be  engraved,  in  the  best  manner  to  guard  against  counterfeiting  and 


40 

fraudulent  alterations,  and  to  have  printed  therefrom,  on  paper  or  similar 
material  best  adapted  therefor,  and  numbered,  the  quantity  of  currency 
notes,  of  the  denominations  of  one  dollar,  two  dollars,  five  dollars,  ten 
dollars,  twenty  dollars,  fifty  dollars,  one  hundred  dollars,  and  five  hundred 
dollars,  as  may  be  required  to  supply  the  issue  herein  called  for.  The 
number  of  each  denomination  in  use  shall  be  such  that  the  needs  of  the 
people  shall  be  best  subserved  thereby.  The  notes  of  each  denomination 
shall  be  consecutively  numbered  in  series.  Said  notes  shall  express  on 
their  face  that  they  are  issued  by  the  Government  of  the  United  States 
of  America  as  the  circulating  medium  of  the  people  of  the  United  States, 
They  shall  have  the  written  or  engraved  signatures  of  the  Treasurer  of 
the  United  States,  and  of  the  Comptroller  of  Finance,  and  the  imprint 
of  the  seal  of  the  Treasurer,  and  shall  bear  such  other  statements  and 
devices  as  the  Secretary  of  the  Treasury  shall  direct.  Said  notes,  and 
gold  and  silver  coin  of  the  United  States,  shall  be  received  at  par,  in 
satisfaction  of  all  obligations  within  the  jurisdiction  of  the  United  States 
for  the  payment  of  money.  Said  gold  and  silver  coin  and  currency  shall 
be  exchangeable  at  the  face  value  thereof. 

SEC.  5.  That  the  Secretary  of  the  Treasury  with  the  approval  of  the 
President  may  from  time  to  time  make  such  rules  and  regulations  for 
the  exchange  of  gold,  silver,  and  currency,  at  the  Treasury  or  any  sub- 
treasury  of  the  United  States,  in  sums  of  not  less  than  five  hundred 
dollars,  as  the  interests  of  the  people  may  require.  Such  rules  and 
regulations  may  require  a  premium  to  be  paid  on  gold  or  silver  taken 
from  the  Treasury  or  sub-treasuries,  for  export;  said  rules  and  regula- 
tions may  also  at  any  time  require  that  the  gold  or  silver  or  any  part 
thereof  taken  from  the  public  lands  of  the  United  States,  or  from  any 
lands  hereafter  sold  or  patented  by  the  United  States,  shall  be  sold  to 
the  United  States  at  its  market  value;  and  there  is  hereby  reserved  to 
the  Government  the  prior  right  to  buy  all  or  any  part  of  such  gold  or 
silver  for  public  use  at  its  market  value,  and  shall  pay  therefor  in 
legal-tender  currency. 

Such  rules  and  regulations  may  further  provide  that  each  banking 
corporation  formed  under  the  laws  of  the  United  States,  and  receiving 
the  benefit  of  such  law,  shall  at  such  times  as  may  be  ordered  forward 
to  the  United  States  Treasury  or  any  sub-treasury  designated,  at  the 
expense  of  the  United  States,  such  a  percentage  of  the  gold  or  silver  held 
by  such  bank  as  may  be  named  in  such  rules  and  regulations,  or  as  may 
be  designated  in  any  special  order,  and  shall  receive  in  exchange  therefor 
legal-tender  currency. 

Such  rules  and  regulations  may  also  provide  for  establishing  a  sys- 
tem for  clearing  international  commercial  balances,  under  which  the 
balances  due  between  domestic  and  foreign  clearing  houses  or  specified 
banks  may  be  deposited  to  the  credit  of  such  clearing  houses  or  banks  in 
the  United  States  Treasury.  Provided  that  all  foreign  balances  due 
the  United  States  Treasury  hereunder  shall  be  deposited  in  the  custody 
of  the  debtor  nation. 


41 

SEC.  6.  That  it  shall  be  the  duty  of  the  Treasurer  of  the  United  States 
to  receive  worn-out  and  mutilated  circulating  notes  issued  hereunder, 
which  shall  be  destroyed  by  being  burned  to  ashes  in  the  presence  of  the 
Secretary  of  the  Treasury  and  the  Comptroller  of  Finance  or  such  other 
person  as  the  President  shall  designate.  A  permanent  book  of  record  of 
the  destruction  of  such  notes,  with  sufficient  description  thereof,  shall  be 
kept  by  the  Comptroller  of  Finance.  After  said  destruction  of  said  notes, 
new  notes  shall  be  issued  to  the  owners  of  the  destroyed  notes. 

SEC.  7.  That  for  the  purpose  of  putting  said  notes  in  circulation  the 
Comptroller  of  Finance  shall  be  authorized  to  retire  all  outstanding 
notes  or  currency  of  the  United  States,  and  to  buy  such  legally  issued 
bonds  of  the  States,  counties,  and  incorporated  cities  of  over  five  thousand 
inhabitants  as  he  deems  proper.  Said  bonds  to  be  issued  by  said  States, 
•counties,  and  cities,  for  a  valuation  not  to  exceed  five  per  cent  of  the  aver- 
age assessed  value  of  the  real  estate  in  said  State,  county,  or  city,  for  the 
five  years  preceding  the  issuance  of  said  bonds,  deducting  from  the  said 
issue  of  bonds  the  par  value  of  any  other  outstanding  bonds  issued  by 
said  State,  county,  or  city.  Said  bonds  shall  be  a  lien  on  all  personal 
and  real  estate  in  said  State,  county,  or  city,  except  public  property,  and 
shall  bear  interest  at  the  rate  of  two  per  cent  per  year,  and  shall  not 
run  to  exceed  twenty  years.  The  interest  shall  be  payable  annually  to 
the  Comptroller  of  Finance  at  Washington,  and  a  sinking  fund  shall  be 
provided  in  each  case  -sufficient  to  liquidate  said  bonds  at  or  before 
maturity.  The  public  issuance  of  such  bonds,  their  delivery  to  the 
Comptroller  of  Finance,  and  the  receipt  of  the  circulating  notes  thereof, 
shall  be  deemed  conclusive  evidence  of  the  legal  issuance  and  validity  of 
said  bonds,  and  thereafter  no  defense  shall  be  set  up  to  the  payment  of 
Principal  or  interest,  or  to  the  levying  and  collecting  of  taxes  therefor. 
All  objections  or  defense  to  the  issue  of  said  bonds  must  be  made  by  the 
parties  interested  prior  to  the  delivery  thereof  to  the  Comptroller  of 
Finance,  otherwise  they  are  forever  waived  and  barred  as  a  defense. 
Said  bonds  may  be  sold  by  the  Comptroller,  and  such  bonds  or  any  United 
States  bonds  may  be  deposited  at  par  by  banks  with  Treasurer  as  reserve 
security,  on  which  said  banks  may  obtain  the  use  of  money  as  hereinafter 
provided. 

If  said  State,  county,  or  city  shall  fail  or  neglect  at  any  time  to  levy 
and  collect  a  sufficient  tax  to  meet  the  obligations  of  said  bonds,  there 
shall  be  immediately  due  and  payable  to  the  Comptroller  of  Finance  a  tax 
an  the  real  and  personal  property  in  said  State,  county,  or  city  in  default, 
#n  its  last  assessment  roll,  sufficient  to  meet  said  payments  and  costs  of 
collecting  the  same;  and  the  same  shall  be  collected  by  any  person  or 
persons  appointed  therefor  by  the  Comptroller  of  Finance,  who  shall 
have  power,  where  said  tax  is  not  paid  within  thirty  days  after  it  is 
levied,  to  collect  the  same  by  seizure  and  sale  upon  warrant  issued  by 
any  judge  ex  part  e  of  any  court  of  original  jurisdiction,  State  or  national , 
having  j  urisdiction  of  the  property.  The  United  States  may  become  the 


purchaser  of  such  property.  Redemption  may  be  made  within  one  year 
after  sale,  by  paying  the  amount  due  on  the  sale,  costs  and  interest 
thereon  at  ten  per  cent.  Provided  that  no  bonds  shall  be  purchased 
hereunder  except  such  as  by  State  laws  are  made  subject  to  the  terms  of 
this  act. 

SEC.  8.  That  associations  for  carrying  on  the  business  of  banking  may 
be  formed  by  any  number  of  persons,  not  less  in  any  case  than  five,  who- 
shall  enter  into  articles  of  association,  which  shall  specify  in  general  terms 
the  proposed  name  of  the  association,  the  object  for  which  the  association  is 
formed,  and  the  proposed  capital  stock ;  and  may  contain  any  other  provision, 
not  inconsistent  with  the  provisions  of  this  act,  which  the  association  may 
see  fit  to  adopt  for  the  regulation  of  the  business  of  the  association  and  the 
conduct  of  its  affairs,  which  said  articles  shall  be  signed  by  the  persons 
uniting  to  form  the  association,  and  a  copy  of  them  forwarded  to  the 
Comptroller  of  Finance,  to  be  filed  and  preserved  in  his  office.  Attached  to- 
said  articles  of  association  shall  be  a  schedule  of  the  bonds  offered  and 
known  as  "  the  reserve  security"  as  herein  provided  for,  which  schedule 
shall  accurately  describe  said  bonds.  Upon  receipt  of  said  articles  and 
schedule,  the  Comptroller  of  Finance  shall  proceed  in  whatever  manner 
he  deems  best  to  verify  the  facts  set  out  in  said  schedule;  and  when  satis- 
fied that  the  average  assessed  value  for  said  five  years  next  preceding 
is  not  in  excess  of  the  actual  value  of  said  real  estate,  and  that  the 
schedule  is  otherwise  correct  as  to  its  statement,  he  shall  notify  said  per- 
sons of  that  fact  of  the  name  approved  by  him  for  the  association. 

SEC.  9.  That  the  persons  uniting  to  form  such  an  association  shall  make 
a  certificate  of  organization,  which  shall  specify: 

First  —The  name  assumed  by  the  association. 

Second — The  place  where  its  operations  of  discount  and  deposit  are  to  be 
carried  on,  designating  the  State,  Territory,  or  district,  and  also  the  partic- 
ular county  and  city,  town  or  village. 

Third—  Its  capital  stock,  and  the  number  of  shares  into  which  it  shall 
be  divided. 

Fourth — The  name  and  places  of  residence  of  the  shareholders,  and  the 
number  of  shares  held  by  each. 

Fifth  —  An  accurate  copy  of  the  schedule  of  bonds  attached\.Q  the  articles 
of  association  provided  for  in  Section  8. 

Sixth  —  A  declaration  that  said  certificate  is  made  to  enable  such  persons 
to  avail  themselves  of  the  advantages  of  this  act,  and  that  said  bonds  are 
for  security  as  required  in  this  act. 

The  said  certificate  shall  be  duly  signed  and  acknowledged  by  each  of 
said  persons,  in  the  manner  required  by  the  law  of  the  place  for  acknowl- 
edging conveyances  of  real  estate,  to  entitle  them  to  be  recorded.  When 
duly  certified  therefor  said  certificate  shall  be  recorded  in  the  proper 
book  of  record  of  the  county  or  district  in  which  the  association  is  situated. 
When  duly  recorded  the  said  certificate  shall  be  transmitted  to  the  Comp- 
troller of  Finance,  who  shall  record  and  carefully  preserve  the  same  in  his 


43 

office.  Copies  of  said  certificate,  duly  certified  by  the  Comptroller  of 
Finance  and  authenticated  by  his  seal  of  office,  shall  be  legal  and  sufficient 
evidence  in  all  courts  and  places  within  the  jurisdiction  of  the  Government 
of  the  United  States  of  the  existence  of  said  association  and  of  every  other 
matter  that  could  be  proved  by  the  production  of  the  original  certificate. 

SEC.  10.  That  no  association  shall  be  organized  hereunder  with  a 
"reserve  security"  greater  than  one  million  dollars,  or  with  a  less 
"  reserve  security  "  than  twenty-five  thousand  dollars,  nor  with  a  capital 
stock  of  less  than  fifty  thousand  dollars. 

SEC.  ii.  That  whenever  a  certificate  of  organization  has  been  received 
and  filed  by  the  Comptroller  of  Finance,  and  is  found  by  him  to  fully  com- 
ply with  the  requirements  of  this  act,  the  Comptroller  of  Finance  shall  pro- 
ceed to  investigate,  in  the  manner  deemed  best,  the  personal  standing, 
financial  condition,  and  record  of  the  persons  seeking  to  form  the  associa- 
tion, also  the  object  of  the  association,  and  any  other  facts  that  may  aid 
him  in  determining  the  desirability  of  such  an  association  and  the  probable 
safety  of  its  business  affairs  and  management.  The  Comptroller  of  Finance 
may  use  such  special  means  as  he  deems  best  to  safely  ascertain  the  facts 
above  referred  to.  When  it  shall  appear  to  the  satisfaction  of  the  Comp- 
troller of  Finance  that  the  association  is  lawfully  entitled  to  commence  the 
business  of  banking  with  safety  to  the  Government  and  to  the  people,  he 
shall  issue  to  such  association  a  certificate  under  his  hand  and  official  seal 
that  such  association  has  complied  with  all  the  provisions  of  this  act 
required  to  be  complied  with,  and  that  such  association  is  author- 
ized to  commence  the  business  of  banking,  designating  the  place  of  busi- 
ness, fully  naming  the  directors  and  officers  thereof  for  the  first  year,  and  its 
capital  stock  and  character  and  amount  of  reserve  security.  The  said 
certificate  shall  be  published  in  such  local  newspapers,  for  sixty  days,  as  the 
Comptroller  of  Finance  shall  designate.  From  the  date  of  said  certificate 
said  association  shall  be  deemed  a  body  corporate  to  transact  the  business 
of  banking  hereunder,  with  the  usual  rights,  powers,  and  duties  of  banking 
corporations,  and  shall  exist  for  a  period  of  twenty  years  from  such  date. 
An  impress  of  its  corporate  seal  shall  be  filed  with  the  Comptroller  of 
Finance  and  with  the  Secretary  of  the  Treasury. 

SEC.  12.  That  thereafter,  upon  the  demand  of  said  association,  the 
Comptroller  of  Finance  shall  issue  to  said  association  a  warrant  on  the 
Treasury  of  the  United  States,  for  circulating  notes  of  the  Government 
to  the  amount  of  ninety-five  per  cent  of  the  par  value  of  said  bonds  depos- 
ited by  said  bank,  or  for  any  part  thereof,  as  demanded  from  time  to  time, 
which  warrants,  upon  presentment  duly  indorsed,  shall  be  paid  out  of, 
the  Treasury  in  the  notes  issued  hereunder.  Said  sum  or  any  part  thereof, 
not  less  than  five  thousand  dollars,  may,  at  any  time,  be  returned  to  the 
Treasury. 

SEC.  13.  That  the  affairs  of  all  associations  for  banking  purposes  formed 
hereunder  shall  be  managed  by  its  board  of  directors  which  maybe  in  legal 
session  on  any  Monday  from  10  A.  M.  wherein  a  quorum  is  present,  and  on 


44 


any  other  day  where,  after  notice,  a  quorum  maybe  present  or  to  which  a 
regular  session  may  be  adjourned,  a  quorum  being  present. 

Every  director  shall  be  a  citizen  of  the  United  States  during  his  whole 
term  of  service;  and  at  least  three-fourths  of  the  directors  shall  have  resided 
in  the  State  or  Territory  or  district  in  which  such  association  is  located  one 
year  next  preceding  their  election  or  appointment  as  directors,  and  shall 
be  residents  thereof  during  their  term  of  office.  Each  director  shall  own 
in  his  own  right  at  least  ten  shares  of  the  capital  stock  of  the  association. 
Each  director,  when  elected  or  appointed,  shall  take  an  oath  that  he  will,  so 
far  as  the  duty  devolves  upon  him,  diligently  and  honestly  administer  the 
affairs  of  such  association,  and  will  not  knowingly  violate,  or  willingly 
permit  to  be  violated,  any  of  the  provisions  of  this  act,  and  that  he  is  the 
bona-fide  owner  in  his  own  right  of  ten  shares  of  the  capital  stock  of  the 
association,  standing  in  his  own  name  on  the  books  of  the  association, 
and  that  the  same  is  not  hypothecated  or  in  any  way  pledged  as  security 
for  any  loan,  debt,  or  obligation  ;  which  oath,  subscribed  by  him  and  duly 
certified  as  required  by  law,  shall  be  immediately  transmitted  to  the  Comp- 
troller of  Finance  and  by  him  filed  and  preserved  in  his  office. 

SEC.  14.  That  the  directors  of  any  association  first  appointed  shall  hold 
office  until  their  successors  shall  be  elected  and  qualified.  All  elections 
shall  be  held  on  the  second  Tuesday  of  January  of  each  year,  and  the 
directors  as  elected  shall  hold  their  places  until  their  successors  are  elected 
and  qualified.  Any  vacancy  occurring  by  reason  of  a  director  ceasing  to 
own  the  required  amount  of  stock,  or  from  any  other  cause,  shall  be  filled 
by  appointment  by  the  board.  If  from  any  cause  an  election  shall  not  be 
held  at  the  time  designated,  it  may  be  held  on  any  subsequent  day  by  pub- 
lishing thirty  days'  notice  thereof  in  a  local  daily  paper. 

SEC.  15.  That  in  all  meetings  of  the  stockholders  each  share  of  stock 
shall  be  entitled  to  one  vote  on  all  questions.  Shareholders  may  vote  by 
proxies,  duly  authorized  in  writing.  None  but  shareholders  can  use  or  hold 
a  proxy. 

SEC.  16.  That  the  shares  of  stock  maybe  transferred  on  the  books  of  the 
association  in  such  manner  as  may  be  prescribed  in  the  by-laws  of  the  asso- 
ciation. No  transfer  shall  be  made  of  stock  where  the  holder  is  indebted  to 
the  association  in  any  manner  ;  but  the  association  has  a  lien  on  all  of  its 
stock  for  such  indebtedness.  Every  person  becoming  a  shareholder,  by 
transfer  or  otherwise,  shall,  in  proportion  to  his  shares,  succeed  to  all  the 
rights  and  liabilities  of  the  prior  holder  of  such  shares,  and  no  change  shall 
be  made  in  the  articles  of  association  by  which  the  rights,  remedies,  and 
securities  of  the  existing  creditors  of  the  association  shall  be  impaired. 
The  shareholders  of  each  association  formed  under  the  provisions  of  this 
act,  and  of  each  existing  bank  or  banking  association  that  may  accept  the  pro- 
visions of  this  act,  shall  be  held  individually  responsible,  equally  and  ratably, 
and  not  one  for  the  other,  for  all  contracts,  debts,  and  engagements  of  such 
associations  to  the  extent  of  the  amount  of  their  stock  therein,  at  par  thereof, 
in  addition  to  the  amount  invested  in  such  shares. 


45 

SEC.  17.  That  the  capital  stock  or  the  reserve  security  of  any  association 
formed  hereunder  may  be  increased  or  decreased  within  the  limits  fixed  for 
the  capital  stock  or  the  reserve  security  by  this  act  by  a  two-thirds  vote  of 
its  shareholders  at  any  annual  meeting  in  January.  The  increase  or 
decrease  of  capital  stock  or  the  reserve  security  shall  be  made  by  comply- 
ing with  the  requirements  of  this  act  as  to  the  formation  of  such  associations 
in  the  first  instance,  and  by  complying  with  such  additional  requirements 
as  the  Comptroller  of  Finance  may  deem  best  to  secure  the  interests  of  all 
parties  concerned,  provided  that  in  the  decrease  of  the  reserve  security 
the  association  so  decreasing  its  reserve  security  shall  surrender  to  the 
Comptroller  of  Finance  circulating  notes  received  thereon  to  the  amount 
of  the  decrease.  In  such  cases  the  Comptroller  of  Finance  may,  in  his 
discretion,  release  from  the  effect  of  this  act  a  pro  rat  a  of  the  bonds 
described  in  the  certificate  of  organization,  but  this  shall  only  be  done  in 
cases  where  the  Comptroller  of  Finance  shall  find  the  association  to  be 
solvent.  T/it'  maximum  or  minimum  of  such  increase  or  decrease  shall 
be  determined  by  the  Comptroller  of  Finance. 

Any  association  organized  hereunder  may  close  up  its  business  and  dis- 
solve its  organization  by  a  vote  of  its  stockholders  had  at  the  annual  meet- 
ing in  January.  In  such  cases  the  association  must  first  settle  all  of  its 
outstanding  obligations  and  return  to  the  Comptroller  of  Finance  the 
amount  of  circulating  notes  received  on  its  reserve  security.  The  Comp- 
troller of  Finance,  upon  receipt  of  a  statement  of  the  foregoing  facts  duly 
authenticated  by  the  directors  of  said  association  under  oath,  shall  fully 
investigate  the  matters  pertaining  thereto;  and  upon  being  satisfied  that  all 
obligations  of  said  association  are  fully  satisfied  and  discharged,  shall  cause 
said  statement  to  be  published  for  at  least  sixty  days  in  a  local  newspaper, 
and  shall  also  cause  a  notice  thereof  to  be  inserted  in  the  United  States 
Bulletin  of  Finance  for  the  same  period.  If  any  objections  to  the  dissolu- 
tion are  filed  with  the  Comptroller  of  Finance  before  the  expiration  of  said 
sixty  days,  he  shall  determine  and  adjust  any  matters  therein  objected  to  ; 
when  so  adjusted,  or  if  no  objections  are  filed  with  him,  he  shall  issue  a 
certificate  dissolving  said  association  and  releasing  the  bonds  held  under 
the  certificate  of  organization  from  any  further  claim  or  demand  thereon. 
Said  certificate  of  dissolution  shall  be  by  him  duly  signed  and  acknowledged 
so  as  to  entitle  the  same  to  record  in  the  office  where  the  certificate  of 
organization  was  recorded.  The  Comptroller  of  Finance  shall  duly  record 
said  certificate  of  dissolution  in  his  office,  and  thereafter  shall  transmit  the 
same  to  said  association  upon  the  same  being  duly  recorded  in  the  office 
where  the  certificate  of  organization  was  recorded.  The  association  will 
thereby  be  completely  dissolved. 

SEC.  1 8.  Should  the  Comptroller  of  Finance  at  any  time  deem  the  affairs 
of  said  association  unsafe  from  any  cause,  he  may  appoint  a  special  agent 
or  agents  under,  his  hand  and  seal  of  office,  who  shall  have  power  to  inspect 
all  affairs  of  said  association,  and  to  close  up  its  affairs  to  the  best  possible 
advantage  to  all  parties  interested.  To  this  end  such  agent  shall  have 


power  to  bring  or  defend  any  suit  in  the  name  of  the  association,  and  to 
sell  at  public  or  private  sale  any  or  all  of  the  property  of  the  association, 
and  to  execute  proper  conveyances  thereof,  and  use  the  proceeds  to  close  up 
the  affairs  of  the  association.  He  shall  also  have  power  to  collect  from  the 
stockholders  the  amount  for  which  they  are  responsible  under  this  act,  and 
to  use  the  same  to  close  up  the  accounts.  He  shall  perform  such  other 
duties  as  may  be  necessary,  and  shall  give  such  bonds  for  faithful  perform- 
ance of  his  duties  hereunder  as  the  Comptroller  of  Finance  may  require. 
His  certificate  of  appointment  shall  be  duly  acknowledged  and  recorded  as 
the  other  certificates  are  required  to  be.  The  Government  shall  be  a  pre- 
ferred creditor  in  all  such  cases  as  are  provided  for  in  this  section. 

SEC.  19.  That  the  directors  may  declare  dividends  from  the  net  profits 
of  the  association,  but  such  association  before  it  shall  declare  a  dividend 
shall  carry  at  least  ten  per  cent  of  its  net  profits  to  a  surplus  fund  until  said 
reserve  fund  shall  equal  the  capital  stock  of  said  association. 

SEC.  20.  That  it  shall  be  lawful  for  any  association  hereunder  to  pur- 
chase, hold,  and  convey  real  estate  as  follows: 

First  —  Such  as  shall  be  necessary  for  its  immediate  accommodation  in 
the  transaction  of  its  business. 

Second —  Such  as  shall  be  mortgaged  to  it  in  good  faith  by  way  of  security 
for  debts  previously  contracted  or  for  loans  made  thereon. 

Third —  Such  as  shall  be  conveyed  to  it  in  satisfaction  of  debts  previously 
incurred  in  the  course  of  its  dealings. 

Fourth—  Such  as  it  shall  purchase  at  sales  under  judgments,  decrees,  or 
mortgages  held  by  the  association,  or  shall  purchase  to  secure  debts  due  to 
said  association. 

Such  association  shall  not  purchase  or  hold  real  estate  for  any  other  pur- 
pose than  as  herein  specified.  Provided,  that  all  such  real  estate  acquired 
other  than  for  the  purpose  of  the  business  of  the  association  shall  be  sold 
within  five  years  after  it  is  obtained  by  the  association. 

SEC.  21.  That  each  association  may  charge  such  rates  of  interest  as  may 
be  allowed  by  local  laws  where  the  association  is  situated.  Each  association 
shall  keep  on  hand  in  cash  an  amount  equal  to  at  least  twenty-five  per  cent 
of  the  amount  of  its  deposits.  When  the  reserve  amount  shall  fall  below 
said  percentage,  no  more  dividends  or  loans  shall  be  made  until  the 
amounts  called  in  shall  restore  the  said  percentage. 

SEC.  22.  That  every  association  hereunder  shall  make  to  the  Comptroller 
of  Finance  a  report,  according  to  the  form  which  may  be  prescribed  by  him, 
verified  by  the  oath  or  affirmation  of  the  president  or  cashier  of  such  associa- 
tion, which  report  shall,  among  other  things,  exhibit  in  detail,  and  under 
appropriate  heads,  the  resources  and  liabilities  of  the  association,  and  the 
last  assessment  'valuation  of  its  real  estate,  before  the  commencement  of 
business  on  the  morning  of  the  first  Monday  of  the  months  of  January, 
April,  July,  and  October  of  each  year,  and  at  such  other  times  as  the 
Comptroller  may  order,  and  shall  transmit  the  same  to  the  Comptroller  of 
Finance  within  five  days  thereafter.  And  any  bank  failing  to  transmit  such 


47 

report  shall  be  subject  to  a  penalty  of  one  thousand  dollars  for  each  day 
after  said  five  jdays  that  said  report  is  delayed  beyond  that  time.  The 
Comptroller  shall  cause  abstracts  of  said  reports  to  be  published  in  the 
United  States  Bulletin  of  Finance,  and  the  separate  report  of  each  associa- 
tion shall  be  published  by  the  association  in  a  local  daily  newspaper  for  at 
least  one  week.  Said  association  shall  forward  with  each  quarterly 
report  one-half  (}4)  of  one  per  cent  of  the  cash  used  on  its  reserve 
security  during  the  preceding  quarter,  as  interest  thereon,  on  sums  not 
to  exceed  one  hundred  thousand  dollars,  and  three-fourths  of  one  per 
cent  per  quarter  on  sums  in  excess  of  one  hundred  thousand  dollars  and 
less  than  tu'O  hundred  thousand  dollars;  thereafter  the  rate  shall 
increase  one  per  cent  per  quarter  additional  on  each  additional  one  hun- 
dred thousand  dollars  used,  or  on  any  part  thereof;  and  in  case  of  default 
in  the  payment  thereof,  by  any  association,  said  interest  may  be  collected 
in  the  manner  provided  for  the  collection  of  United  States  duties  of  other 
corporations.  In  addition  to  the  quarterly  reports  required  herein,  every 
association  shall,  on  the  first  Tuesday  of  each  month,  make  to  the  Comp- 
troller of  Finance  a  statement,  under  oath  of  the  president  or  the  cashier, 
showing  the  condition  of  the  association  making  such  statement,  in  respect 
to  the  average  amount  of  loans  and  discounts,  specie  and  circulating  notes 
on  hand  belonging  to  the  association,  clearing-house  certificates,  deposits, 
and  such  other  matters  as  the  Comptroller  of  Finance  may  require. 

SEC.  23.  That  no  association  shall  make  loans  or  discounts  on  the  security 
of  the  shares  of  its  own  capital  stock,  nor  be  the  purchaser  or  holder  of  any 
such  shares,  unless  such  security  or  purchase  shall  be  necessary  to  prevent 
loss  upon  a  debt  previously  contracted  in  good  faith;  and  stock  so  pur- 
chased or  acquired  shall  be  sold  within  six  months  from  the  time  of  its  pur- 
chase. But  no  such  purchase  or  sale  shall  relieve  the  former  owner  thereof 
from  his  pro  rata  of  responsibility  for  all  debts  incurred  by  the  association 
prior  to  sale  and  transfer  to  a  new  purchaser  in  good  faith. 

SEC.  24.  That  no  association,  or  any  member  thereof,  shall,  during  the 
time  it  shall  continue  its  banking  operations,  withdraw,  or  permit  to  be 
withdrawn,  either  in  the  form  of  dividends  or  otherwise,  any  portion  of  its 
capital  or  surplus  fund.  And  if  any  losses  shall  at  any  time  have  been  sus- 
tained by  any  such  association,  equal  to  or  exceeding  its  undivided  profits 
then  on  hand  in  cash,  no  dividend  shall  be  made;  and  no  dividend  shall 
ever  be  made  by  any  association,  while  it  shall  continue  its  banking  opera- 
tions, to  an  amount  greater  than  its  net  profits  then  on  hand,  deducting 
therefrom  its  losses  and  bad  debts  and  ten  per  cent  for  the  reserve  fund. 
And  all  debts  due  any  association  on  which  the  interest  is  past  due 
and  unpaid  for  a  period  of  six  months,  unless  the  same  shall  be  well  secured 
and  shall  be  in  process  of  collection,  shall  be  considered  bad  debts  within 
the  meaning  of  this  act. 

SEC.  25.  That  the  president  and  cashier  of  every  such  association  shall 
cause  to  be  kept  at  all  times  a  full  and  correct  list  of  the  names  and  resi- 
dences of  all  the  shareholders  in  the  association,  and  the  number  of  shares 


48 


held  by  each,  in  the  office  where  its  business  is  transacted;  and  such  list 
shall  be  subject  to  public  inspection  during  business  hours  of  each  day  in 
which  business  may  be  legally  transacted.  A  copy  of  said  list  shall  be  sent 
with  each  quarterly  report  to  the  Comptroller  of  Finance. 

SEC.  26.  That  the  directors  of  any  bank  incorporated  under  any 
national  or  State  law  may,  upon  the  authorization  of  the  owners  of  two- 
thirds  the  capital  stock,  in  writing,  duly  signed  and  acknowledged, 
avail  themselves  of  the  provisions  of  this  act  and  become  a  national  asso- 
ciation under  their  corporate  name  by  complying  with  the  provisions  of 
this  act;  the  said  directors  being  by  said  vote  authorized  to  execute  all 
papers  relating  thereto.  Any  matters  not  herein  provided  for  in  such  cases- 
shall  be  adjusted  by  the  Comptroller  of  Finance  in  accordance  with  the 
spirit  and  intention  of  this  act. 

SEC.  27.  That  all  associations  under  this  act,  when  designated  for  that 
purpose  by  the  Secretary  of  the  Treasury,  shall  be  depositaries  of  public 
money,  except  receipts  from  customs,  under  such  regulations  as  may  be 
prescribed  by  the  Secretary;  and  they  may  also  be  employed  as  financial 
agents  of  the  Government;  and  they  shall  perform  all  such  reasonable 
duties,  as  depositaries  of  public  moneys  and  financial  agents  of  the  Govern- 
ment, as  may  be  required  of  them.  And  the  Secretary  of  the  Treasury 
shall  require  of  the  association  thus  designated  satisfactory  security  for  the 
safe-keeping  and  prompt  payment  of  public  funds  deposited  with  them,  and 
for  the  faithful  performance  of  their  duties  as  financial  agents  of  the 
Government. 

SEC.  28.  That  all  transfers  of  the  assets,  or  any  part  thereof,  of  any 
association  doing  business  hereunder,  made  after  the  commission  of  an  act 
of  insolvency,  or  in  contemplation  thereof,  with  a  view  to  prevent  the  appli- 
cation of  it  as  assets  in  the  manner  prescribed  in  this  act,  or  with  a  view  to 
the  preference  of  one  creditor  to  another,  shall  be  utterly  null  and  void. 

SEC.  29.  That  any  director,  officer,  or  employe  of  any  association  organ- 
ized hereunder  who  shall  knowingly  violate,  or  permit  any  of  such  persons 
to  violate,  the  provisions  of  this  act,  shall  be  removed  forthwith  from  his 
position,  by  the  proper  authority  of  the  association,  or  by  order  of  the 
Comptroller  of  Finance.  And  any  director,  officer,  or  employ^  of  such 
association  who  shall  so  transact  the  business  of  such  association,  or  any 
part  of  it,  as  to  intentionally  defraud  the  association  or  any  one  else,  or 
with  the  intention  to  deceive  or  mislead  any  officer  of  the  association,  or 
any  agent  appointed  to  examine  the  affairs  of  such  association,  shall  be 
deemed  guilty  of  a  misdemeanor,  and  upon  conviction  thereof  shall  be 
punished  by  imprisonment  for  not  more  than  ten  years. 

SEC.  30.  That  all  suits  and  proceedings  arising  out  of  the  provisions  of 
this  act,  in  which  the  United  States  or  its  agents  or  officers  shall  be  parties, 
shall  be  conducted  by  the  district  attorneys  of  the  several  districts,  under 
the  direction  and  supervision  of  the  Solicitor  of  the  Treasury.  And  that 
all  suits  or  actions  arising  under  the  provisions  of  this  act  may  be  had  in 
any  circuit,  district,  or  territorial  court  of  the  United  States  held  within  the 
16 


49 

district  in  which  the  association  may  be  established,  or  in  any  State, 
county,  or  municipal  court,  in  the  jurisdiction  of  which  said  association  is 
established,  which  has  jurisdiction  in  similar  case. 

SEC.  31.  That  if  any  person  shall  falsely  make,  forge,  or  counterfeit,  or 
cause  or  procure  to  be  made,  forged,  or  counterfeited,  or  willingly  aids  or 
assists  in  forging  or  counterfeiting,  any  note  in  imitation  of,  or  purporting 
to  be  in  imitation  of  the  circulating  notes  issued  under  the  provision  of  this 
act,  or  shall  pass,  utter  or  publish,  or  attempt  to  pass,  utter  or  publish,  any 
false,  forged  or  counterfeited  note  purporting  to  be  issued  under  the  provis- 
ions of  this  act,  knowing  the  same  to  be  fasely  made,  forged  or  counterfeited, 
or  shall  falsely  alter,  or  cause  or  procure  to  be  falsely  altered,  or  will- 
ingly aids  or  assists  in  falsely  altering,  any  such  circulating  notes  issued 
under  the  provisions  of  this  act,  or  shall  pass,  utter,  or  publish,  or  attempt 
to  pass,  utter,  or  publish  as  true  any  falsely  altered  or  spurious  circulating 
notes  issued,  or  purporting  to  have  been  issued,  under  the  provisions  of  this 
act,  knowing  the  same  to  be  falsely  altered  or  spurious,  every  such  person 
shall  be  deemed  and  ad juged  guilty  of  a  felony,  and  being  thereof  convicted 
shall  be  sentenced  to  be  imprisoned  and  kept  at  hard  labor  for  a  period  of 
not  less  than  five  years  or  more  than  twenty  years,  and  fined  in  a  sum  not 
exceeding  one  thousand  dollars. 

SEC.  32.  That  if  any  person  shall  make  or  engrave,  or  cause  or  procure 
to  be  made  or  engraved,  or  shall  have  in  his  custody  or  possession  any  plate, 
die,  or  block  after  the  similitude  of  any  plate,  die,  or  block  from  which  any 
circulating  notes  issued  as  aforesaid  shall  have  been  prepared  or  printed, 
with  intent  to  use  such  plate,  die,  or  block,  or  cause  or  suffer  the  same  to  be 
used,  in  forging  or  counterfeiting  any  of  the  notes  issued  as  aforesaid,  or 
shall  have  in  his  custody  or  possession  any  blank  note  or  notes  engraved 
and  printed  after  the  similitude  of  any  notes  issued  as  aforesaid  with  intent 
to  use  such  blanks,  or  cause  or  suffer  the  same  to  be  used,  in  forging  or 
counterfeiting  any  of  the  notes  issued  as  aforesaid,  or  shall  have  in  his  cus- 
tody or  possession  any  paper  adapted  to  the  making  of  such  notes,  and 
similar  to  the  paper  upon  which  any  such  notes  shall  have  been  issued, 
with  intent  to  use  such  paper,  or  cause  or  suffer  the  same  to  be  used,  in  forg- 
ing or  counterfeiting  any  of  the  notes  issued  as  aforesaid,  every  such  person, 
being  thereof  convicted  by  due  course  of  law,  shall  be  sentenced  to  be 
imprisoned  and  kept  at  hard  labor  for  a  term  not  less  than  five  or  more 
than  twenty  years,  and  fined  in  a  sum  not  exceeding  one  thousand  dollars. 

SEC.  33.  That  the  Comptroller  of  Finance  shall  cause  to  be  prepared 
each  month  concise  information  showing  the  amount  of  circulating  notes 
issued  during  the  preceding  month  and  the  approximate  amount  of  cir- 
culating notes,  gold  and  silver  coin  reported  in  the  banks  in  each  State, 
Territory,  District,  and  in  the  principal  cities  of  the  United  Slates,  and 
also  the  amount  in  the  various  vaults  or  Treasuries  of  t/ie  L'nitcd  States. 
It  shall  also  contain  the  name  of  each  bank,  the  amount  of  its  capital 
stock,  its  reserve  fund,  and  its  losses  for  the  preceding  month,  and  such 
other  information  as  shall  be  deemed  of  sufficient  value  to  the  financial 


interest  of  the  people  to  be  published.  Such  information  shall  be  pub- 
lished monthly  by  the  Department  of  Printing  in  pamphlet  form,  of  con- 
venient size  for  permanent  binding  in  book  form.  One  copy  of  each  issue 
shall  be  sent  monthly  to  each  of  the  following  parties:  To  each  associa- 
tion doing  business  hereunder;  to  the  President  and  each  member  of  his 
Cabinet,  to  each  member  of  Congress,  and  to  such  other  officers  of  the 
Government  as  the  Comptroller  of  Finance  may  direct.  Also  to  the 
Governor  of  each  State,  Territory,  or  District,  and  to  each  public  library, 
university,  or  college  applying  therefor.  Any  person  may  have  a  copy 
forwarded  to  his  address  for  one  year  by  first  forwarding  to  the  Comp- 
troller of  Finance  the  sum  of  one  dollar. 

SEC.  34.  That  as  the  currency  notes  shall  accumulate  in  the  Treasury 
of  the  Government, from  revenue  or  otherwise,  they  shall  be  returned  to 
circulation  among  the  people,  in  addition  to  the  ways  hereinbefore  speci- 
fied, by  paying  the  current  expenses  of  the  Government;  by  the  purchase 
of  suitable  grounds  and  the  erection  of  suitable  buildings  for  post  offices 
and  other  uses  of  the  Government;  by  the  construction  of  such  other 
works  as  shall  be  deemed  by  Congress  for  the  best  interests  of  the  public. 
The  expenditures  shall  be  made  annually,  in  each  State,  Territory,  or 
District,  as  nearly  as  may  be  in  proportion  to  the  number  of  its  inhab- 
itants. The  expenditures  hereunder  shall  be  as  directed  from  time  to 
time  by  Congress. 

SEC.  35.  That  all  notes  issued  hereunder  and  all  moneys  received  by 
the  Comptroller  of  Finance  hereunder  shall  be  deposited  in  the  Treasury  of 
the  United  States.  And  the  Comptroller  of  Finance  shall  keep  an  itemized 
account  of  the  sources  from  which  received,  with  the  dates  thereof. 

SEC.  36.  That  it  shall  be  unlawful  for  any  officer  acting  under  the  pro- 
visions of  this  act  to  countersign  or  deliver  to  any  association,  or  to  any 
other  company  or  person,  any  circulating  notes  contemplated  by  this  act, 
except  as  herein  provided,  and  in  accordance  with  the  true  intent  and  mean- 
ing of  this  act.  And  any  officer  who  shall  violate  the  provisions  of  this  sec- 
tion shall  be  deemed  guilty  of  a  high  misdemeanor,  and  on  conviction 
thereof  shall  be  punished  by  a  fine  not  exceeding  double  the  amount  so 
countersigned  and  delivered,  and  imprisoned  for  not  less  than  one  year  and 
for  not  exceeding  fifteen  years. 

SEC.  37.  That  if  the  directors  of  any  association  shall  knowingly  vio- 
late, or  knowingly  permit  any  of  the  officers,  agents,  or  servants  of  the 
association  to  violate,  any  of  the  provisions  of  this  act,  all  the  rights,  privi- 
leges, and  franchises  of  the  association  derived  from  this  act  shall  be 
thereby  forfeited.  Such  violation  shall  be  first  determined  and  adjudged  by 
a  proper  circuit,  district,  or  territorial  court  of  the  United  States,  in  a  suit 
brought  for  that  purpose  in  the  name  of  the  Comptroller  of  Finance,  which 
decree  shall  adjudge  the  association  dissolved.  Thereupon  the  affairs  of  the 
association  shall  be  closed  up  by  the  Comptroller  of  Finance;  and  in  case  of 
such  violation,  every  director  who  participated  in  or  assented  to  the  same 
iShall  be  held  liable  in  his  personal  and  individual  capacity  for  all  damages 


51 


which  the  association,  its  shareholders,  or  any  other  person  shall  have  sus- 
tained in  consequence  of  such  violation.  Such  directors  shall  hereafter  be 
disqualified  for  the  office  of  director  in  any  association  formed  hereunder; 
and  any  president,  director,  cashier,  teller,  clerk,  or  agent  of  any  association 
who  shall  embezzle,  abstract,  or  willfully  misapply  any  of  the  moneys, 
funds,  or  credits  of  the  association,  or  shall,  without  authority  from  the 
directors,  issue  or  put  forth  any  certificate  of  deposit,  draw  any  order  or 
bill  of  exchange,  make  any  acceptance,  assign  any  note,  bond,  or  draft, 
bill  of  exchange,  mortgage,  judgment,  or  decree,  or  shall  make  any  false 
entry  in  any  book,  report,  or  statement  of  the  association,  with  intent  in 
either  case  to  injure  or  defraud  the  association,  or  any  other  company,  body 
politic  or  corporate,  or  any  individual  person,  or  to  deceive  any  officer  of 
the  association,  or  any  agent  appointed  to  examine  the  affairs  of  any  such 
.association,  shall  be  deemed  guilty  of  a  misdemeanor,  and  upon  conviction 
thereof  shall  be  punished  by  imprisonment  not  less  than  one  and  not  more 
than  ten  years. 

SEC.  38.  That  the  Comptroller  of  Finance,  with  the  approbation  of  the 
Secretary  ot  the  Treasury,  as  often  as  it  shall  be  deemed  necessary  or  proper, 
shall  appoint  a  suitable  person  or  persons  to  make  an  examination  of  the 
.affairs  of  every  banking  association  formed  hereunder;  which  person  or 
persons  shall  not  be  a  director  or  other  officer  or  employ^  in  any  association 
whose  affairs  he  shall  be  appointed  to  examine,  and  who  shall  have  power 
to  make  a  thorough  examination  into  all  the  affairs  of  the  association,  and, 
in  doing  so,  to  examine  any  of  the  officers  and  agents  thereof  on  oath,  and 
shall  make  a  full  detailed  report  of  the  condition  of  the  association  to  the 
Comptroller.  And  the  association  shall  not  be  subject  to  any  other  visi- 
torial  powers  than  such  as  are  authorized  by  this  act,  except  such  as  are 
vested  in  the  several  courts  of  law  and  chancery.  And  every  person 
appointed  to  make  such  examination  shall  receive  for  his  services  at  the 
rate  of  five  dollars  for  each  day  employed  by  him  in  such  examination,  and 
t\v<>  dollars  for  each  twenty-five  miles  he  shall  necessarily  travel  in  the 
performance  of  his  duty. 

SEC.  39.  That  persons  holding  stock  as  executors,  guardians,  adminis- 
trators, or  trustees  shall  not  be  personally  subject  to.  any  liabilities  as  stock- 
holders, but  the  estates  and  funds  in  their  hands  shall  be  liable  in  like 
manner  and  to  the  same  extent  as  the  testator,  intestate,  ward,  or  person 
interested  in  said  trust  funds  would  be  if  they  were  respectively  living  and 
-competent  to  act  and  hold  the  stock  in  their  own  names. 

SEC.  40.  That  hereafter  no  national  associations  for  the  purpose  of 
banking  shall  be  formed  except  under  the  provisions  of  this  act,  and  all 
banking  institutions  now  under  the  provisions  of  prior  acts  of  Congress 
shall  be  allowed  to  continue  under  such  acts  until  their  proper  term  of 
existence  has  expired.  The  currency  issued  under  the  provisions  of  this 
act  shall  be  deemed  a  public  use,  and  shall  not  be  subject  to  taxation  in 
the  hands  of  citizens  of  the  United  States;  but  gold  or  silver  coin  or  bull- 


ion  shall  be  subject  to  taxation  at  its  market  or  commercial  bullion 
value. 

SEC.  41.  That  the  present  Comptroller  of  Currency  shall  hereafter 
be  known  as  the  Comptroller  of  Finance,  under  this  act,  and  under  such 
name  shall,  with  the  bureau  now  established,  perform  all  duties  required 
under  the  various  acts  of  Congress  relating  to  currency  or  a  circulating 
medium. 

SEC.  42.  That  all  acts  or  parts  of  an  act  in  conflict  with  the  provisions 
of  this  act  are  hereby  repealed,  and  Congress  may  at  any  time  amend, 
alter,  or  repeal  this  act. 

NOTE. — In  reference  to  this  bill  see  House  of  Representatives  document., 
Fifty-second  Congress,  second  session,  Report  2614,  Part  2.. 


From  the  Los  Angeles  Evening  Express,  Nov.  10, 
189:5. 

WANTS  MORE  MONEY. 


JU1>GJE       WJDNJEY'S        REMEDY      FOR 
THE  FINANCIAL,    STRINGENCY. 


He     Would     Add     !$30O,OOO,OOO     United 

States  Currency  to  the  Circulating 

Medium— The  Repeal  Law. 


Judge  R  M.  Widney,  President  of 
the  University  Bank  and  well  known 
writer  on  financial  subjects,  was  asked 
by  the  EXPRESS  for  his  views  on  the 
effect  of  the  silver  purchase  repeal.  He 
replied: 

"The  effect  of  the  repeal  of  the  Sher- 
man silver  act  in  itself  is  not  of  much 
consequence,  but  it  may  become  the 
precedent  for  very  important  action 
by  Congress.  Its  first  effect  is  to  pre- 
vent a  monthly  increase  of  over 
$3,000,000  per  month  in  our  volume  of 
money.  This,  in  our  present  money 
stringency,  is  a  great  evil.  But  a  coun- 
ter effect  of  the  repeal  may  be  to  in- 
duce eastern  capitalists  to  more  freely 
put  in  circulation  their  hoarded 
money.  This  would  be  a  temporary 
benefit,  but  there  is  not  to  exceed 
probably  $20,000,000  that  would  be 
from  this  cause  placed  in  circulation. 
It  is  more  probable  that  such  capital- 
ists will  wait  to  see  the  result  of  re- 
peal. In  this  case  the  general  money 
market  will  grow  worse. 

"The  resources,  commerce  and  busi- 
ness of  this  nation  are  so  great  that  it 
will  take  not  less  than  $300,000,000  new 
money  added  to  our  present  volume  to 
place  the  country  on  a  prosperous 
basis.  This  cannot  be  done  by  the  use 
of  either  gold  or  silver,  for  there  is  not 
enough  of  them.  We  should  use  all  of 
our  gold  and  silver  and  supplement  it 
with  at  least  $300,000,000  U.  S.  currency 
exchangeable  for  gold  or  silver  at  par, 
under  such  rules  and  regulations  as 
will  best  subserve  the  interests  of  the 
people. 

"The  repeal  of  the  Sherman  act  now 


clears  the  way  for  Congress  to  act  free 
from  the  silver  question.  If  Congress 
will  now  perfect  a  financial  system, 
increasing  our  volume  of  currency, 
giving  it  the  safety  and  stability  of  a 
constitutional  amendment,  we  can  at 
once  enter  upon  our  grandest  era  of 
national  prosperity. 

"But  it'  Congress  leaves  our  financial 
situation  as  it  now  is,  we  will  enter 
upon  a  period  of  danger  aud  disaster 
greater  than  any  in  the  past.  Every 
nation  is  short  in  its  money  volume, 
and  no  nation  can  help  any  other. 
There  will  arise  an  international 
struggle  for  existing  money,  followed 
by  a  domestic  struggle  of  the  same 
kind,  resulting  in  the  hoarding  of 
money  to  a  greater  extent  than  ever 
before.  More  industries  must  close 
up  and  the  army  of  the  unemployed 
will  be  increased.  They  will  not  starve, 
and  tailing  to  get  work  they  will 
drift  into  organized  bands 
and  plunder  for  a  living. 
No  local  effort  to  give  employment  will 
be  sufficient  to  meet  their  wants.  The 
remedy  must  be  as  broad  as  the  cause 
that  has  thrown  them  out  of  employ- 
ment. The  closed  industries  from 
which  they  have  been  discharged  must 
be  revived.  This  can  only  be  done  by 
increasing  our  volume  of  money,  the 
lack  of  which  closed  our  industries. 
The  sessions  of  Congress  since  1891 
are  responsible  for  the  present  disaster. 
The  political  parties  have  been  fighting 
for  office  and  plunder.  Their  great 
object  has  been  to  give  each  other  a 
"black  eye,"  or  put  the  other  "in  a 
hole,"  in  order  to  make  party  capital 
for  the  next  campaign. 

"Had  Congress  given  the  people 
proper  financial  legislation  the  nation 
today  would  be  in  a  full  tide  of 
prosperity. 

"Europe  bought  our  bonds  and  se- 
curities at  a  low  figure.  We  could  re- 
purchase them  now  at  a  still  lower 
figure,  but  have  not  the  money.  If 
our  currency  volume  were  increased, 
our  gold  could  go  abroad  and  buy  our 
securities  while  at  a  low  figure,  thus 
relieving  our  people  of  this  debt  to 
foreigners,  and  at  the  same  time  fur- 
nish capital  for  our  domestic  wants." 


From  the  Los  Angeles  Kvonini;  Kxuivss,  Nov.  1"., 
is-*:;. 

JUDGE  WIDSEY  ON  METALLIC  COINS. 


What     He    Consid    rs    to     Be    the    Pioper 
Use  of  Gold  mut   Silver. 

Judge  R.  M.  Widney,  President  of  the 
University  Bank,  in  conversation  with 
an  EXPRESS  reporter,  on  the  coinage 
question,  said: 

"The  present  use  of  silver  at  412>£ 
grains  to  the  dollar,  opens  up  a  profit- 
able field  for  counterfeiting.  At  pres- 
ent price  for  silver  the  silver  dollar 
contains  56  cents  worth  of  silver.  Yet 
backed  by  44  cents  worth  of  govern- 
ment credit  it  passes  for  100  cents. 
The  counterfeiter  of  silver  dollars, 
making  dollars  of  standard  weight  and 
fineness,  clears  44  cents  on  each  dollar 
for  his  work.  Or  on  each  $100,000  he 
makes  $44,000.  In  the  present  expert 
condition  of  the  engraver's  art,  dies 
can  be  made  as  perfect  as  any  used  by 
the  mint.  Tbis  open  field  for  counter- 
feiting is  free  coinage,  except  the  me- 
chanical cost,  which  is  very  small,  the 
counterfeiter  reaping  a  rich  harvest. 

"The  Treasury  Department  reports 
that  there  are  several  million  more  of 
silver  dollars  in  circulation  than  have 
ever  been  coined  by  the  mint,  showing 
that  the  work  is  extensively  carried  on. 
A  million  dollars  of  counterfeit  means 
$440,000  profit  to  the  operators.  The 
only  way  to  avoid  this  and  use  silver,  is 
for  our  government  to  buy  silver  at  its 
commercial  value  and  issue  certificates 
for  it.  For  silver  change,  in  half  dol- 
lars and  less,  increase  the  weight  so 
that  the  com  contains  silver  nearly  up 
to  its  commercial  value.  That  is  the 
five-cent  piece  would  be  as  large  as  a 
dime,  the  dime  as  large  as  a  20-cent 
piece,  the  25-cent  piece  would  be  as 
large  as  the  half  dollar,  and  it  again  as 
large  as  the  dollar. 

"The  diameter  and  thickness  could 
both  be  increased  so  as  to  produce  a 


convenient  coin.  This  would  do  away 
with  nickles,  a  coin  intrinsically  worth 
only  about  1  cent  and  counterfeited 
by  the  wholesale.  The  gold  and  silver 
purchased  by  the  government  should 
be  ran  into  ingots  of  certain  weight 
and  fineness  and  sold  at  its  commer- 
cial value  for  currency  to  those  need- 
ing it  for  payment  of  foreign  debts. 
The  legal  tender  currency  based  on 
the  commercial  value  of  gold  and  sil- 
ver and  exchangeable  therefor  at  their 
commercial  value  would  meet  every 
requirement  for  domestic  use,  with  the 
silver  coins  above  referred  to. 

"In  paying  foreign  debts  gold  and 
silver  are  weighed  and  used  only  at 
bullion  value.  No  more  gold  or  silver 
should  therefore  be  coined  than  may 
be  used  for  domestic  purposes.  All 
the  balance  of  the  gold  and  silver 
should  be  run  into  ingots  of  the  value 
of  say  $50,  $100  or  $1000,  or  whatever 
size  was  found  most  convenient.  Gold 
coin  in  circulation  looses  by  wear, 
sweating,  splitting  and  filling  and  plug- 
ging and  is  therefore  not  adapted  to 
circulation  with  advantage. 

"The  coin  bags  used  by  the  Bank  of 
England  and  for  oceanic  shipment  are 
carefully  preserved  and  periodically 
burned,  and  the  ashes  washed  out  and 
the  fine  gold  powder  saved  and  melted. 

"Civilization  is  rapidly  passiug  the 
age  wherein  gold  or  silver  coins  to  any 
great  amount  will  be  used.  Those 
metals  will  be  stored  and  paper  money 
exchangeable  for  the  bullion  or  coins 
issued  for  commercial  use.  Some  one 
says  this  is  a  new  plan  and  therefore 
objectionable.  Quite  the  contrary.  The 
Bank  of  Venice,  the  first  bank  in  the 
world,  one  that  stood  for  over  400 
years,  was  based  on  this  principle.  It 
grew  up  from  the  demands  of  trade 
and  met  the  wants  so  fully  that  it 
stood  through  the  centuries  Gold  and 
silver  were  stored  by  weight  and  fine- 
ness and  certificates  issued  therefor 
which  were  used  for  all  domestic  pay- 
ments. The  coin  was  only  called  for 
when  needed  for  foreign  payments." 


From  tin-  [^08  Angeles  K\riiiim'  K\|>ivss.  Nov.  IT.. 
1893. 

THE  FINANCIAL  STBIKGEISCT. 


Judge     Widney     Does     Not      Think 
TarilV  Was  the   Cause. 


the 


Judire  It.  M.  Widney,  President  of 
the  University  Bank,  talked  instruc- 
tively to  an  EXPRESS  reporter  as  fol- 
lows: 

"The  tariff  question  is  alleged  by 
many  to  be  the  cause  of  tLe  present 
depressed  financial  condition  of  the 
country.  A  careful  consideration  of 
the  facts  will  show  such  not  to  be  the 
case  only  incidentally. 

"The  financial  stringency  and  conse- 
quent depression  antedates  the  entire 
tariff  agitation.  The  McKinley  act 
became  a  law  in  1891,  subsequent  to 
several  serious  panics. 

"On  October  3,  1878,  the  New  York 
banks  had  issued  $22,410,000  Clearing 
House  certificates.  These  were  retired 
in  1874. 

"On  May  24,  1884,  they  were  again 
forced  to  issue  $21,885,000,  and  the  last 
were  canceled  in  September,  1885. 

"In  November,  1890, they agaiD  issued 
to  the  amount  of  $15,205,000.  All  of 
these  were  canceled  in  December,  1890. 

"In  1893,  these  bonds  were  again  run 
short  of  money  and  issued  $41,490,000 
Clearing  House  certificates,  which  were 
canceled  in  November,  1893. 

"The  issue  of  Clearing  House  certifi- 
cates are  among  the  last  resorts  of 
banks  to  make  up  a  circulating  medium 
in  the  existence  of  stringent  money 
times,  and  are  considered  conclusive 
evidence  among  financiers  of  extreme 
danger. 

"It  will  be  seen  from  the  above  that  in 
the  last  twenty  years  we  have  had  four 
stringencies,  three  of  which  antedated 
all  tariff  and  free  coil. age  agitation." 

"If  it  were  announced  by  Congress 
that  the  McKinley  tariff  would  not  be 
changed,  the  industries  of  the  country 
could  not  materially  open  up,  for  they 
can  not  get  the  actual  money  to  operate 
on.  A  limited  number  could,  but  the 
industries  generally  could  not,  for  the 
volume  of  money  does  not  exist. 


"No  silver  or  tariff  legislation  will 
solve  the  problem,  for  neither  or  both 
are  the  cause.  The  cause  antedates 
both  of  these,  as  shown  by  the  statis- 
tics above. 

"The  stringencies  of  1873,  1884,  1S90, 
1893,  explain  the  political  landslides  of 
recent  years. 

"The  business  of  the  country  has 
been  in  a  bad  condition.  The  masses 
of  the  people  felt  the  pressure.  They 
knew  neithnr  1  he  cause  nor  the  remedy. 
They  trusted  to  their  political  doc- 
tors. 

"In  the  first  Cleveland  campaign  the 
voters  knew  that  the  Republican  doc- 
tor had  failed  to  give  relief.  The  Dem- 
ocratic political  doctors  assured  to  the 
voters  that  they  could  effect  a  cure, 
and  the  people  voted  them  into  office. 

"They  failed  as  completely  as  the  Re- 
publicans, and  the  voters  again  tried 
the  Republican  medicos,  and  elected 
Harrison  on  the  express  promise  that 
they  could  bring  relief.  But  they  again 
failed, and  the  condition  of  the  country 
grew  worse. 

"In  the  last  campaign  the  Democrats 
alleged  that  they  hnd  the  healing  balm; 
that  the  tariff  and  the  Sherman  act 
wero  the  evils,  and  that  they  would 
cure  both. 

"The  masses  suffering  under  the 
effect  of  growing  stringency  of  money, 
voted  Cleveland  in  with  a  mighty  vote. 

"But  the  debate  in  the  extra  session 
of  Congress  drew  forth  the  declaration 
from  all  the  parties  that  the  Sherman 
silver  act  cut  very  little  figure  in  the 
case.  It  was  repealed  and  no  benefit 
has  come  from  it.  The  tariff  agitation 
has  been  of  damaging  effect.  The 
masses  again  s-aw  that  the  political 
doctors  were  ignorant  of  the  disease, 
its  cauee  and  its  remedy.  In  the  re- 
cent State  elections  they  have  ex- 
preseed  their  dissatisfaction.  The 
Populists  proposed  remedies,  but  the 
few  people  they  put  in  office,  as  Mrs. 
Lease  of  Kansas  said  recently,  are 
miserable  failures,  and  the  shrinking 
vote  shov.  s  loss  of  public  confidence. 

"I  draw  the  following  conclusions 
from  the  facts  cited: 

"The  people  have  been  suffering  for 
over  twenty  years  from  ctiii^es,  un- 
known to  them,  the  effect  of  which  has 
been  to  make  tinu  s  grow  worse  every 


year,  until  it  has  reached  the  calami- 
ties of  1893. 

"They  also  know  that  they  are  in  a 
country  capable  of  supporting  a  popu- 
lation of  over  600,000,000,  yet  with 
about  one-tenth  of  that  number,  there 
is  distress,  suffering  and  lack  of  em- 
ployment for  anxious  and  willing 
hands. 

"They  have  looked  to  our  politicians 
and  self-constituted  leaders,  expecting 
them  professionally  to  know  the 
disease,  the  cause  and  the  remedy. 

"They  know  that  they  have  been 
fooled.  Bad  has  gone  to  worse.  The 
people  do  not  care  a  fig  for  either  the 
Republican,  Democratic  or  Populist 
party  or  leaders. 

"What  they  want  is  a  remedy,  such 


that  in  a  country  capable  of  support- 
600,000,000  people,  starvation,  want  and 
ruin  shall  not  stalk  abroad  among  60,- 
000,000  people.  Finally  these  land 
slides  will  grow  into  an  avalanche,  and 
either  able  statesmen  who  can  and  will 
solve  the  problem  of  so  governing  this 
nation  that  present  inexcusable  evils 
shall  be  remedied,  or  will  eventually 
destroy  the  government.  The  unem- 
ployed offer  for  sale  their  labor,  to  get 
food  and  clothing.  No  one  buys,  for 
the  money  is  not  in  circulation,  there 
is  a  money  stringency,  a  money  famine,  a 
stagnation  everywhere  for  want  of  it, 
and  the  remedy  withheld. 

"The  remedy  is  a  fundamental  re- 
vision of  our  financial  and  monetary 
system,  and  no  more  patchwork." 


From  the  Los  Angeles  Herald,  May  27,  1894 

THE    GOLD     RESERVE 

And  Its   Maintenance  by  the  Sale  of 
Bonds. 

[BY    R.    M.    WIDNEY.] 

Not  long  ago  the  secretary  of  the 
United  States  sold  United  States  r>  »uda 
to  replenish  the  depleted  gold  receive. 

In  justification  of  such  action  ni'uvi 
was  said  b*  those  uvorable  to  tfu>  me.ir-- 
ure,  they  anting  such  a  course  to  be*  the 
only  solution. 

Recent  events  show  that  the  aforesaid 
solution  did  not  solve,  and  that  the  re- 
serve is  now  below  the  $100,000,000 
limit. 

If  the  bond  plan  is  kept  up  by  the 
treasury  department  it  will  result  in 
running  all  gold-redeemable  currency 
into  interest  bearing  bonds,  ami  will 
thus  either  increase  our  interest-bearing 
debt  indefinitely  or  it  will  retire  all  of 
our  gold-redeemable  currency.  Should 
the  government  reissue  each  currency 
when  once  taken  in  fjr  gold  it  would 
again  and  again  be  presented  at  the 
United  8  ates  treasury  for  gold  redemp- 
tion, and  tije  gold  reserve  would  as  often 
fall  below  the  hundred  million  limit, 
necessitating  again  the  issue  o/  more 
bonds  to  sell  for  gold  to  redeem  c'i.- 
rency,  which  again  put  in  circulation 
would  again  come  back  to  take  out  gold 
and  run  the  supply  theieof  beljw  the 
hundred-million  limit,  to  again  cause 
the  sale  of  bonds  for  gold,  etc.,  e  c.  The 
outcome  of  sue  t  a  system  will  be  to 
enable  f;he  owners  of  gold  to  turn  mer 
chandige  into  gold  interest-bearing 
bondd  just  as  long  as  the  treas- 
ury department  will  keep  up 
its  end  of  the  game.  Because 
when  the  gold  is  taken  out  of  the  treas- 
ury for  gold  currency  surrendered,  the 
government  must  pay  out  this  same  gold- 
redeemable  currency  lor  expenses. 
Owners  of  merchandise  will  receive  this 
currency  for  their  articles,  and  as  such 
currency  accumulates  in  bank  or  in  the 
hands  of  goldites,  it  will  be  again  run  in 
on  the  treasury  and  gold  taken  out,  to  be 
resold  to  the  treasury  for  more  interest- 
bearing  bonds 

This  process  can    end,    if   carried  out, 
only    in    the  bankruptcy    of  the  United 


States  and  the  financial  enslavement  of 
the  people. 

If  to  avoid  this  the  treasury  should 
refine  to  reissue  the  gold-redeemable 
currency,  then  the  end  would  be  that  all 
such  currency  would  be  turned  into  gold 
bonds  and  our  volume  of  money  would 
becontactel  several  hundred  millions 
of  dollars  by  ',he  retirement  of  all  of  our 
currency. 

This  would  so  contract  our  volume  of 
money  that  we  would  be  reduced  to  a 
condition  of  insolvency. 

That  is,  debtors  could  not  get  money 
on  thr-ir  property  to  meet  their  obliga- 
tions to  creditors.  There  would  not  be 
enough  money  to  transact  business,  a  id 
the  financial  an  1  commercial  panics  of 
the  past  would  only  be  zephyrs  compared 
to  the  cyclone  that  would  carry  destruc- 
tion over  the  land. 

Evidently  this  thimble-rigging  racket 
is  being  systematically  worked  for  all  it 
is  worth,  by  some  financial  power, on  the 
United  States  treasury. 

It  increases  our  interest-bearing  debt 
and  decreases  our  volume  of  money.  It 
increases  our  debt  and  decreases  our 
power  to  pay  the  debt. 

What  is  trie  solution  of  this  riddle  by 
the  financial  sphinx  that  is  proposing 
the  question,  and  is  financially  eating 
us  up  for  not  answering  it? 

The  plain  answer  is,  change  the  sys- 
tem ;  alter  the  points  at  which  the  trick 
is  played. 

To  illustrate,  and  at  the  same  time 
approach  the  point  by  degrees:  What 
is  a  United  S  ates  bond?  It  ia  nothing 
more  or  less  than  a  clnster  of  green- 
backs fastened  together  and  sold  at  a 
discount,  but  lacks  oeing  a  legal  tender. 
The  legal  phraseology  of  a  greenback  ia : 

The   Uuited   States  of  America   will  pay  the 
bearer  flve  hundred  dollars  on  demand. 
Thi ,  note  is  a  lesjal  tender,  tte. 

The  United  States  bond  reads: 

Tbe  United  States  of  America  is  indebted  to 
the  bearer  in  tne  sum  of  five  hundred  dollars 
Payable  July  1,  1907. 

To  this  bond  ia  attached  40  coupons, 
to  represent  the  semi-annual  payment 
of  interest,  say  at  4  per  cent,  for  20 
years.  The  coupon  reads  as  follows: 

The  United  States  of  America  will  pay  the 

bearer  ten  dollars  on  the day  of  -  — , 

18 — . 


The  greenback,  the  bond  and  thb 
coupon  are  of  the  sume  iegul  obligation, 
a  promise  to  pay:  the  greenb*ek  on 
demand;  rhe  bond  in  20  year*;  the 
coupons  at  given  intermediate  dates. 

Add  th«  value  of  the  40  coupons  to 
the  face  value  of  the  bond  and  thev 
represent  a  par  value  of  $900  in  green- 
backs. That  is,  selling  a  $500  4  per  cent 
20  year  coupon  bond  for  par  (,$500)  is 
the  same  as  selling  $900  in  greenback* 
for  $500,  payable  20  years  .hence  without 
interest. 

But  the  bond  is  not  a  legal  tender  and 
can  not  be  used  as  money,  and  its  exist- 
ence and  use  produce  no  compensation. 
A  greenback,  however,  circulates  as 
money,  and  by  its  use  produced  a  value 
equal  to  the  rate  of  interest.  It  is  of 
value  to  the  people  of  the  United  States 
in  its  use. 

Therefore  if  selling  bonds  to  buy  gold 
were  stopped  we  cjuM  buy  gold  with 
greenbacks  bv  issuing  on  the  same  basis 
as  the  bonds,  to  say  the  least  That  19, 
$900  in  greenbacks  redeemable  in  gold 
20  years  hence  would  bring  at  least  as 
much  as  a  bond,  $500,  giving  $400  bonus 
for  the  gold.  In  this  case  the  $900  cur- 
rency would  go  into  circulation  und  in- 
crease our  volume  of  money,  and  our 
gold  obligation  would  be  the  same.  The 
bond  is  only  the  promise  of  the 
nation  unsecured ;  so  is  the  cou- 
pon, so  is  the  greenback.  Each 
has  Dack  of  it  the  power,  the  good  faith 
and  wealth  of  the  nation,  nothing  more, 
nothing  less.  One  is  as  good  as  the 
other,  and  neither  ia  better  than  the 
other.  The  power,  faith  and  ability  of 
the  nation  to  meet  the  obligations  is  the 
real  basis  of  value  in  each  ;  hence,  all 
financial  talk  about  the  bonds  possess- 
ing «n  element  of  value  not  in  the  trreen- 
back,  is  financial  sleight-of-han  $  to  fojl 
the  people. 

The  bond  is  not  as  good  as  the  green- 
back for  the  ueopleof  the  United  States, 
for  it  is  not  a  legal  tender,  end  we  get  no 
money  use  out  of  it  and  tr  e  coupon,  wh«  re- 
as,  from  the  greenback  we  get  an  an- 
nual money  use.  Owing  to  the  fact  that 
the  greenback  has  a  money  use,  it  would 
not  take  $900  in  greenbacks,  redeemable 
in  gold  20  years  hence,  to  buy  $500  in 
gold.  In  fact  such  greenbacks  would  to- 


day buy  goid  either  at  par  or  at  a  slight 
premium.  Because,  if  the  owner  of  $500 
in  goid  could  get  $510  ia  legal  tender 
currency,  he  could  net  the  $10  by  the 
exchange  and  have  the  $510  with  which 
to  pay  any  of  his  debts,  whereas,  before, 
the  gold  could  only  pay  $500  of  debts. 

Therefore,  to  issue  legal  tender  green- 
backs redeemable  20  years  hence  in 
gold,  and  with  them  buy  goid  is  better 
for  the  people  then  to  sell  bonds. 

But  the  bonds  are  better  for  the 
money  owners,  because  they  are  sold  at 
such  a  discount,  and  they  keep  down 
the  volume  of  money;  thus  increasing 
the  purchasing  power  of  money. 

How  long  will  the  people  etand  this 
transparent  fraud? 

One  other  important  change  should  be 
made  in  our  financial  system.  The 
treasurer  should  have  the  power  to 
charge  a  premium  on  all  gold  or  silver 
taiten  for  export  England,  France, 
Germany  and  other  nations  exercise 
this  power,  to  letain  gold  and  silver. 
The  United  States  aloue  is  open  to  free 
plunder  by  foreign  financiers  in  this  re- 
spect, and  daily  the  plundering  goes  on. 

It  may  be  safely  said  that  the  Ameri- 
can financial  system  is  the  biggest  fool 
system  on  the  lace  of  the  earth, 
and  can  only  be  accoun  ed  for  on 
the  basin  either  of  want  of  sense, 
consummate  villiany  or  criminal  care- 
lessness. Oar  financial  ayatern  should 
be  remodeled  throughout  and  placed  on 
a  scientific  business  basis.  We  should 
have  American  money  for  American 
business,  and  enough  of  it  to  obviate 
the  necessity  oi  any  foreign  en  mey  ever 
coming  here.  Wt  now  pay  annually 
over  $100,000,000  in  interest  and  profits 
for  the  use  of  foreign  money.  This 
would  give  employment  to  over  200,000 
persons  at  $1.50  per  day  for  300  days  in 
'.he  year.  This  alone  would  materially 
aid  in  solving  our  labor  question,  and 
with  i»n  increased  volume  of  currency, 
instead  of  bonds,  our  industries  would 
s  )on  be  active  and  all  laborers  em- 
ployed. 

But  why  should  we  perpetuate  the 
folly  of  buying  gold  at  all  for  domestic 
money  use?  Or  with  ihe  balance  ot  for- 
eign trade  in  our  favor,  why  buy  gold  at 
all? 


From  the  Los  Angeles  Herald,  July  7,  1894. 

THE     GREAT    STRIKE    OF     1894. 


Its    Business,     Legal    and     Political 
Aspects— Its  Rights  and  Wrongs. 

[BY    R.    M.    WIDNKY    OF    LOS    ANGELES.] 

The  present  great  strike  will  go  into 
history  as  "the  great  strike  of  1894." 
It  will  be  discussed  and  analyzed  by  cool 
heads  and  disinterested  minds  as  a  phe- 
nomenon of  remarkable  peculiarity.  It 
occurred  when  millions  were  out  of  em- 
ployment and  anxious  to  get  work  and 
many  wera  in  a  distressed  and  tttarving 
condition.  Bui  the  strike  did  uot  occur 
among  these. 

It  occurred  among  those  who  were 
fortunate  enough  to  be  in  lucrative  em- 
ployment. A  remarkable  degree  of  con- 
tentment and  satisfaction  existed  be 
tween  the  employed  and  employers,  an 
baa  been  publicly  expressed  by  botn 
the  strikers  and  the  employers. 

As  stated  in  the  strikers'  advocate 
published  in  Oakland.  Pullman  cut 
down  the  wages  of  the  men  engaged  in 
putting  vestibules  on  his  cars  and  re- 
fused to  restore  the  former  wages.  A 
strike  resulted  in  his  shops,  which  was 
followed  by  a  boycott  on  all  Pullman 
cars  in  use  by  the  public.  This  resulted 
in  a  boycott  of  ail  train-  carrying  such 
cars,  even  where  they  were  declared  to 
be  United  States  mail  trains.  Then  fol- 
lowed a  boycott  of  all  freight  and  pas- 
senger traffic  on  all  railroads  refusing  to 
cut  out  Pullman  cars.  From  this  result 
ed  a  stopping  of  ail  interstate  commerce 
and  mail  trains  on  the  railroads.  The 
above  is  a  general  statement  of  the  tie- 
up  and  the  stopping  of  all  railroad  tran- 
sit. The  United  States  authorities,  by 
court  and  otherwise,  have  undertaken  to 
enforce  inter-state  traffic  and  the  running 
of  regular  mail  trains  as  they  have  hereto- 
fore run  Mr.  Deb-,  presidentof  the  A.R 
U.,  has  given  his  orders  to  the  members  of 
the  A.  R  U.,  which  are  of  such  a  char- 
acter that  the  members  must  either  dis- 
obey Debs  or  disobey  the  United  States 
laws  and  the  processes  of  its  courts. 

With  the  foregoing  outline  picture  in 
our  minds,  first,  what  is  the  business 
aspect  and  who  are  the  losers? 

Pullman  is  losing  almost   nothing,  for 


the  impeded  passenger  traffic  will  sim- 
ply double  up  when  the  trains  again 
move,  and  Pullman's  receipts  will  only 
be  delayed  a  cbort  time. 

The  railroad  companies  are  not  under 
any  expense  to  the  mass  of  employees, 
they  are  out  on  the  strike,  no  coal  is  be- 
ing consumed,  t  ere  are  no  running  ex- 
penses, no  wear  and  tear  on  machinery, 
so  their  loss  is  but  a  trifle.  All  the 
freight,  except  perishable  articles,  is 
simply  accumulating,  and  the  railroads 
will  take  in  the  freight  and  passenger 
money  a  little  later,  and  so  they  are  not 
losing  very  much.  Al«  destruction  of 
their  property  by  mob  violence  can  be 
recovered  from  the  communities  in 
which  it  occurs. 

The  great  loss    is    upon    the    strikers. 

Over  50,000  men  are  out  under  the 
strike,  representing  a  daily  average  in 
wages  of  about  $3  per  day,  or  a  daily 
loss  of  some  $150,000.  This  is  a  real  loss 
that  can  never  be  repaired.  A  day's 
Ictbor  lost,  is  lost  forever.  The  hands  ot 
time  will  not  turn  backward.  Tomor- 
row may  never  come,  and  today,  and  in 
each  day  can  only  bn  done  the  work  for 
that  day.  In  no  day  can  the  work  of  a 
former  day  be  done,  without  losing  the 
work  of  that  day.  Hence  the  10  days' 
loss  to  the  strikers  in  wages  represents 
not  less  than  $1,500,000.  A  dead  loss! 
Lost  irreparably,  lost  forever;  and  thn 
original  party,  Pullman,  and  the  rail- 
roads, secondarily,  onlv  postponed  in 
their  receipts  for  delayed  passengers  and 
freight. 

Another  class  injured  is  the  producers 
of  perishable  freight.  The  innocent 
fruit  and  vegetable  producers  who  have 
labored  a  year  to  produce  a  perishable 
crop  arn  injured.  Estimates  oi  their 
loss  for  Caiifornia  are  as  high  as  $50,000 
to  $75,000 per  day, which  for  the  10  day.-' 
strike  is  now  $500,000  to  $750,000— K 
dead  loss  to  innocent,  hard-working 
people;  a  loss  that  no  one  proposes  to 
pay  them  for. 

Mr.  Roberts,  president  of  one  of  the 
striking  orders,  in  San  Francisco,  the 
Examiner  reports,  refuses  to  allow  per 
ishable  goods  or  fruits  to  be  moved,  say- 
ing that  the  producers  will  have  to  stand 
the  loss  so  far  as  he  is  concerned 

The  railroad  officials    are    reported    to 


have  offered  to  move  the  perishable 
freight  if  allowed  to  do  so  on  ordinary 
freight  trains. 

The  noticeable  feature  of  the  business 
aspect  is  that  Mr.  Debs  is  damaging  the 
strikers  by  his  orders  to  the  amount  of 
$150,000  per  day;  is  damaging  California 
fruit  producers  $75,000  per  day,  and  is 
not  damaging  Pullman,  the  alleged  ag- 
gressor and  party  to  blame,  to  any  mate- 
rial extent;  is  damaging  the  railroads  to 
a  very  limited  extent,  and  is  damaging 
the  innocent  65,000,000  people  to  an  un- 
told extent. 

WHAT   is    THE    LEGAL  ASPECT  ? 

In  brief,  Mr.  Debs  has  placed  himself 
and  all  officers  and  members  of  the 
American  Railway  union  under  the  laws 
of  the  state  and  federal  governments  in 
a  conspiracy. 

I  believe  that  the  members  of  the 
order  in  this  respect  have  been  misled. 
They  are  fundamentally  law  abiding, 
but  having  joined  the  order  for  common 
good,  as  they  supposed  at  the  time,  and 
leeling  that  thev  were  in  honor  bound, 
as  they  understand  it,  to  obey  the  order 
of  Debs,  they  have  unwittingly  been 
placed  in  a  legal  position  that  they 
wou'd  not  have  intentionally  entered. 

Many  condemn  the  law  of  conspiracy, 
and  intimate  that  it  was  a  tricky,  secret 
enactment  sprung  on  the  laboring  man. 
Such  ia  not  the  case. 

The  laws  relating  to  conspiracy  are 
fundamentally  the  same  for  over  400 
years. 

Blackstone  stated  in  his  day  that  a 
conspiracy  "may  be  to  injure  public 
trade,  to  affect  public  health,  to  violate 
public  police,  to  insult  public  justice,  or 
to  do  any  act  iteelf  illegal."  In  fact,  the 
whole  law  of  conspiracies  was  in  that 
day  vastly  more  strict  than  the  above. 
It  made  all  combinations  to  interfere  be- 
tween employer  and  employee  in  any 
injurious  mannei  to  either  aide  a  crim- 
inal offense.  The  first  statute  of  Cali- 
fornia made  it  a  conspiracy  "to  commit 
any  act  injurious  to  trade  or  commerce, 
or  for  the  perversion  or  obstruction  of 
justice  or  due  administration  of  ths 
laws." 

The  same  are  the  substance  of  the 
United  States  laws  from  the  foundation 


of  the  government.  Mr.  Debs  by  his 
orders  has  placed  himself  and  members 
of  the  order  in  violation  of  these  laws. 
Now,  the  laws  of  the  land  must  be  en- 
forced or  we  have  an  end  of  government. 
The  whole  power  of  the  army  and  navy 
and  of  our  police  and  militia  force  are 
pledged  to  enforce  the  laws  of  the  land. 
The  question  in  tae  United  States  is  not 
now  between  Pullman  and  Debs  or  the 
American  Railway  union.  It  is  between 
the  military  power  of  the  United  Sutea 
and  persons  plunged  unwittingly  into  a 
conspiracy.  It  is  a  question  whether 
congress  and  the  laws  are  the  govern- 
ment or  Debs  and  his  orders  are  the  gov- 
ernment. Whether  the  Lord  is  God  or 
Baael  is  God,  as  Klieha  of  old  said  on 
Mt.  Carmel. 

Mr.  Debs  has  blundered,  fearfully 
blundered,  as  a  general  in  managing  this 
fight.  In  his  use  of  power  he  has  evi- 
dently lost  his  head  and  placed  thou- 
sands of  peaceable,  patriotic,  law-abid- 
ing citizens  unwittingly  in  open  hostility 
to  the  civil  and  military  power  of  the 
nation.  There  can  be  only  one  outcome 
to  the  contest  as  it  is  now  waged.  No 
arbitration  can  occur  between  the  United 
States  and  hostile  citizens. 

Had  Mr.  Debs  boycotted  the  Pullman 
shops  and  never  let  another  car  come 
out,  and  noc  interfered  with  those  in 
public  use.  he  would  have  had  the  sup- 
port of  the  public.  But  he  has  now 
brought  about  a  conflict  between  the 
laws  of  the  nation  and  himself. 

Under  the  laws  the  arrest  and  convic- 
tion of  Mr.  Debs  and  his  officers  is  only 
a  question  of  time  and  procesfl  of  court. 

The  members  of  the  American  Rail- 
way union  are  entitled  to  the  benefit  of 
the  fact  that  they  were  honestly  misled 
and  did  not  know  the  result  of  their  acts. 

I  must  say  that  the  members  of  the 
order  in  Los  Aneeles  have  shown  rare 
good  sense  and  self-respect  in  the  law- 
abiding  manner  in  which  they  have 
thus  far  acted.  Some  hot  expressions 
are  certainly  excusable  under  the  cir- 
cumstances. I  am  personally  acquaint- 
ed with  large  numbers  of  them,  and  be- 
lieve they  will  abide  by  the  laws  of  the 
land  and  orders  of  the  court  in  all  cases 
where  they  conflict  with  Mr.  Debs'  or- 
ders. 


The  political  aspect  is  brief.  The 
highest  allegiance  of  each  and  all  of  us 
is  to  this  government.  No  government 
is  or  ever  will  be  perfect,  or  satisfactory 
to  all.  The  Almighty  could  not  make 
such  a  government.  He  tried  it  thou- 
sands of  years  ago  and  the  peoplo  were 
not  satisfied,  and  ran  it  themselves  into 
a  fine  smashup. 

This  ia  the  best  government  up  to 
date  on  earth.  If  it  goes  down  it  will  be 
replaced  with  a  more  centralized  form, 
with  less  liberty.  The  greatest  menace 
to  European  forms  of  government  is  the 
success  of  American  republics.  If  the 
day  of  civil  turmoil  ever  comes  and 
Europe  can  furnish  her  armies  to  aid 
one  side  in  establishing  a  monarchical 
form  of  government  on  the  the  ruins  of 
the  republic  ehe  will,  in  self  defense, 
most  certainly  do  it.  Therefore,  our 
citizens  who  tind  themselves  under  Mr. 
Debs'  orders,  jeopardizing  the  safety  of 
our  form  of  government,  should  thor- 
oughly reconsider  the  matter. 

My  judgment  is  that  they  should,  in 
the  interest  of  law  and  order,  home  and 
country,  notify  Mr.  Debs  that  as  Ameri- 
can citizens  they  will  obey  the  laws  of 
and  processes  of  court  until  such  times 
as  he  shall  remove  the  conflict  of  au- 
thority. 

I  would  suggest  further,  that  in  jus- 
tice to  the  innocent  public  and  the  suf- 
fering producers  whose  hard-earned 
products  for  a  year  are  about  to  be  de- 
stroyed, that  they  should  at  once  offer 
to  return  to  the  discharge  of  their  duties 
without  conditions  until  the  legal  aspect 
of  the  trouble  is  settled. 

In  no  manner  should  we  justify  or  ex- 
cuse the  wrongs  of  Pullman,  or  of  the 
corporations,  nor  of  congress,  nor  of  the 
strikers,  but  we  should  endorse  the 
right  of  each  as  it  exists. 

The  rights  and  wrongs  must,  however, 
be  administered  pursuant  to  our  laws, 
and  not  in  violation  thereof. 

The  foregoing  views  are  respectfully 
submitted  to  the  careful  consideration 
of  my  fellow  citizens,  and  especially  to 
those  who  are  directly  involved  in  the 
great  strike  of  1894. 


YC_  1 50  I  I 

U.C.BERKELEY  LIBRARIES 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 
This  book  is  DUE  on  the  last  date  stamped  below. 

Fine  schedule:  25  cents  on  first  day  overdue 

50  cents  on  fourth  day  overdue 
One  dollar  on  seventh  day  overdue. 


JUN  15  v 


•"""x* 


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$*£"• 


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i  ^^ 


ii^»'  'Xx* 


